Tigo Energy - Earnings Call - Q4 2024
February 11, 2025
Executive Summary
- Q4 2024 revenue rose to $17.3M, up 21.3% sequentially and 86.8% year over year; however, a $19.5M inventory charge drove gross margin to -72.7% and widened GAAP net loss to $26.8M.
- Excluding reserves, management indicated underlying gross margins ~40% in Q4 and mid-30s to upper-30s going forward, supported by TS4-X mix and cost-downs.
- Guidance: Q1 2025 revenue $17–$19M and adjusted EBITDA loss $2.5–$4.5M; FY 2025 revenue $85–$100M, with adjusted EBITDA breakeven targeted on ~$25–$28M quarterly revenue at mid-30s margins, implying second-half profitability on an adjusted basis.
- Stock narrative catalyst: strong sequential/top-line momentum and EMEA/Americas strength vs. headline inventory charge in GO ESS batteries; management says ~90% of ESS inventory reserved, removing a major uncertainty and supporting margin normalization.
What Went Well and What Went Wrong
What Went Well
- Four consecutive quarters of sequential revenue growth; Q4 revenue +21.3% q/q and +86.8% y/y, with strength in EMEA ($11.2M, 65%) and Americas ($4.6M, 27%).
- TS4-X product family driving healthier margins and large-scale wins (e.g., 142MW in Spain; 97k devices in Brazil); management: “we continue to gain market share”.
- Emerging software traction: Predict+ meters under management grew to 101,000 in Q4, with six new contracts ($1.4M multi-year value); CEO also cited 140,000 meters and ~600 GWh under management as of year-end in prepared remarks.
What Went Wrong
- A $19.5M Q4 inventory charge (GO ESS batteries) caused gross loss (-72.7% margin) and widened adjusted EBITDA loss to $22.1M and GAAP net loss to $26.8M.
- APAC weakened in Q4 (9% of revenue; -44% q/q) as battery pricing pressure and competitive intensity persisted in storage/inverter markets.
- Full-year 2024 revenues fell 62.8% to $54.0M; GAAP net loss widened to $62.7M (includes $23.5M inventory charges), highlighting the magnitude of the industry downturn and ESS drag.
Transcript
Operator (participant)
Good afternoon and welcome to Tigo Energy's Fiscal Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. Joining us from Tigo are Zvi Alon, CEO, and Bill Roeschlein, CFO. As a reminder, this call is being recorded. I would now like to turn the call over to Bill Roeschlein, Chief Financial Officer. Please go ahead.
Bill Roeschlein (CFO)
Thank you, Operator.
We'd like to remind everyone that some of the matters we'll discuss on this call, including our expected business outlook, our ability to increase our revenues and become profitable, and our overall long-term growth prospects, expectations regarding recovery in our industry, including the timing thereof, statements about our demand for our products, our competitive position and market share, 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 and adjusted EBITDA for the first fiscal quarter 2025, and our revenue for the first fiscal quarter and full year of 2025 and 2024, and our ability to penetrate new markets and expand our market share, including expansion in international markets and investments in our product portfolio, are forward-looking and, as such, are subject to known and unknown risks and uncertainties, including but not limited to those factors described in today's press release and described in the risk factors section of our most recent annual report on Form 10-K and other reports we may file with the SEC from time to time.
These risks and uncertainties could cause actual results to differ materially from those expressed on this call. These forward-looking statements are made only as of the date as of 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 8-K. The non-GAAP financial measures provided should not be considered 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 Tigo's Investor Relations website at investors.tigo-energy.com. With that, I'd like to now turn the call over to Tigo CEO, Zvi Alon. Zvi?
Zvi Alon (CEO)
Thank you, Bill. To begin today's discussion, I will highlight key areas in our recent performance to wrap up the past year and provide some commentary on recent operational highlights before turning the call over to our CFO, Bill Roeschlein. He will discuss our financial results for the fourth quarter in more depth, as well as provide our guidance for the first quarter of 2025 and full year of 2025. After that, I will share some closing remarks, tell you about our outlook for the year 2025, and then open the call for questions from our analysts. Let's get started. I'm pleased to report that we ended 2024 with yet another sequential quarterly revenue growth, making it four out of four for the fiscal year. Given how 2023 ended, I'm exceptionally proud of what our team at Tigo has managed to accomplish.
To give some geographical color on the results, we saw positive sales growth, especially within the EMEA and Americas regions during the quarter. Expanding our sales footprint into markets and doubling down our efforts in key markets has remained an area of focus for us. To share only a few recent highlights, our team has spent time in Malaysia and Hawaii to educate, train, and sell our product portfolio. In the fourth quarter of 2024, we shipped 480,000 MLP units, bringing our 2024 MLP shipped total to 1.5 million units. Our TS4X product line continues to build momentum in the marketplace, and we expect this trend to continue in 2025. Additionally, we achieved multiple utility-scale wins in 2024, and our pipeline in this sector of the market continues to grow.
Another key focus area is within our EI software solution, where our Predict+ AI-based energy consumption and production platform continues to grow. We announced yesterday that since the first quarter of 2024, Predict+ platform has grown from 15,000 to 140,000 meters under management and covers a total of 600 GWh of energy at year-end. As Predict+ expands into Europe and North America, we are bringing machine learning to energy analytics and predictions to a new standard for energy forecasting. Our annual recurring revenue, or ARR, now stands above $1 million per year, and we expect it will continue to grow in 2025. Additionally, we just recently announced another great milestone. Since the inception of the program, Green Glove has now reached 1,000 site engagements, globally including over 700 C&I installations and over 300 residential solar installations.
We are excited to see our efforts towards the total quality solar starting to pay off. With that, I would like to turn it over to Bill. Bill?
Bill Roeschlein (CFO)
Thank you, Zvi. Before I start reviewing the results of the fourth quarter, I would like to address the inventory reserve charges that are significantly impacting many line items in our income statement as they are accounted for in the cost of revenue. In 2024, our GO ESS storage and solutions business represented 6% of total sales compared with 9% of total sales in the prior year, reflecting the fact that this business line has not participated in our business recovery as well as we had anticipated. As you may be well aware of, this segment of the market has many market participants competing for market share, and battery prices in particular continue to fall at a significant rate, all of which negatively impacts companies holding high inventory positions.
As mentioned in our previous earnings call, the charges taken in both the third and fourth quarters reflect management's estimate of the inventory's net realizable value and incorporate current and future expectations of the market environment. Now turning to the financial results for the fourth quarter ended December 31st, 2024. Revenue for the fourth quarter of 2024 increased 86.8% to $17.3 million from $9.2 million in the prior year period. On a sequential basis, revenues increased 21.3%, with improved results coming from many countries in the EMEA and Americas regions, including the U.S. and Germany, along with some recovery in Italy. By region, EMEA revenue was $11.2 million, or 65% of total revenues, and a 29.3% sequential increase. Americas revenue was $4.6 million, or 27% of total revenues, and a 57.2% sequential increase. APAC revenue was $1.5 million, or 9% of total revenues, and a decline of 44% sequentially.
Gross loss in the fourth quarter of 2024 was $12.6 million, or negative 72.7% of revenue, compared to gross profit of $2.9 million, or 31.1% of revenue in the comparable year-ago period. The year-over-year decline was primarily due to the previously mentioned inventory charge of $19.5 million. Operating expenses for the fourth quarter declined 29.8% to $11.6 million, compared to $16.4 million in the prior year period. The decline was driven primarily by our previously announced cost-cutting efforts. Operating loss for the fourth quarter increased by 77.9% to $24.1 million, compared to $13.5 million in the prior year period. GAAP net loss for the fourth quarter was $26.8 million, compared to a net loss of $14.8 million in the prior year period.
While we recorded a higher net loss on a GAAP basis for the fourth quarter compared to the prior year period, absent the inventory charge, our results reflect progress towards profitability on a non-GAAP basis. Adjusted EBITDA loss in the fourth quarter increased 90.4% to $22.1 million, compared to an adjusted EBITDA loss of $11.6 million in the prior year period. As a reminder, adjusted EBITDA is a non-GAAP measure that represents net loss as adjusted for interest and other expenses, income tax expense, depreciation, amortization, stock-based compensation, and M&A transaction expenses. Primary shares outstanding were 60.8 million for the fourth quarter of 2024. Turning to the balance sheet, accounts receivable net decreased this quarter to $8 million compared to $8.8 million last quarter and increased from $6.9 million in the year-ago comparable period.
Inventory's net decreased by $24.8 million, or 53%, to $22 million, compared to $46.8 million last quarter and $61.4 million in the year-ago comparable period. Cash, cash equivalents, and short and long-term marketable securities totaled $19.9 million at December 31st, 2024. On a sequential basis, cash increased by $400,000 as we continue to make progress on reducing our inventory and working capital. Turning now to our financial outlook for our first quarter of 2025 and full year of 2025. As a reminder, Tigo provides quarterly guidance for revenue as well as adjusted EBITDA, as we believe that these metrics to be key indicators for the overall performance of our business. For the first quarter of 2025, we expect revenues and adjusted EBITDA to be in the following range. We expect revenues in the first quarter ended March 31st, 2025, to range between $17 million and $19 million.
We expect adjusted EBITDA loss to range between $2.5 million-$4.5 million. For the full year of 2025, we expect revenues to range between $85 million-$100 million. That completes my summary. I'd like to now turn the call back over to Zvi for final remarks.
Zvi Alon (CEO)
Thanks, Bill. As we look ahead, I can say that the industry still faces headwinds, but our track record over the past year, 2024, makes us believe that our robust product portfolio solutions allow us to mitigate the industry and market pressure better than others. As demand of our solutions continues to return, we expect revenue to increase steadily throughout the remainder of 2025. After four quarters of sequential top-line growth, we believe we have enough visibility into what's ahead for the company to carefully provide an outlook for the four quarters ahead of us. We anticipate that our quarterly revenues will continue to improve throughout 2025. We firmly believe in the growth prospects of our business and look forward to providing additional updates in the coming quarters. With that, operator, please open the call for Q&A.
Operator (participant)
Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star one one on your telephone. If your question has been answered and you wish to move yourself from the queue, please press star one one again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Eric Stein with Craig-Hallum Capital Group. Your line is open.
Eric Stine (Senior Research Analyst)
Hi, Zvi. Hi, Bill.
Bill Roeschlein (CFO)
Hello. Hi. Hello.
Eric Stine (Senior Research Analyst)
Maybe just on the adjusted EBITDA, I know you called out the charge X that a loss of $2.6 million. Can you just remind, when you previously guided, were you expecting or factoring a charge into that? Just noteworthy that at the midpoint, excluding the charge, you outperformed by $5 million.
Bill Roeschlein (CFO)
Yeah, correct. In the last call, we did say in our guidance that the EBITDA guidance reflected an expectation of additional inventory reserves. That being said, the amount of the inventory reserve ended up being higher than we had initially anticipated during that call. We feel that the reserve taken is both adequate and necessary as we move forward.
Eric Stine (Senior Research Analyst)
Sticking with the charge, I mean, do you feel like this kind of covers it? I mean, you're not expecting, I guess, from the guide, it would imply that you're not expecting a charge in Q1, at least.
Bill Roeschlein (CFO)
Right. Yes, as part of the annual audit, obviously, review process, we have to look at the balance sheet in terms of valuation. At this point, with the reserve taken, we've reserved 90% of the energy storage solutions business inventory. We're left with a net book value somewhere around the $2.1 million range, which we think is adequate and justified given what we expect to sell.
Eric Stine (Senior Research Analyst)
Got it. Okay. That's helpful. Just looking at OpEx, looks like it came down a little bit more. I'm just curious, as you think about fiscal 2025 guidance and maybe where you are exiting the year, I mean, do you have—I know in the past you've given some quarterly revenue targets for cash flow positive and EBITDA positive. Are those things that you are able to update on this call?
Bill Roeschlein (CFO)
Yeah, certainly. In general, we look to keep the cash OpEx, which is looking at the OpEx and taking out the EBITDA adjustments, stock-based comp, and amortization, depreciation, to come up with an OpEx number that is sub $10 million. In this past quarter, it was around a little bit less than $9.5 million. There is going to be a little bit of lumpiness with Q1, where we have the annual audit and expenses related to that. We have some ebbs and flows as it relates to some litigation expense. We believe that after Q1, we are able to take the OpEx further down somewhat. With some assistance with the OpEx being lower, along with kind of not having the continual drag of reserving inventory, which, if you recall, in Q1, Q3, and Q4, we had reserves.
Primarily for the GO ESS solutions product. Absent that, our margins were mid-30s to Q4 was actually 40%. Taking that forward, our outlook for break-even EBITDA is more like $25 million-$28 million at that mid-30%-high 30% gross margin range. Our guidance of $85 million-$100 million is 8.5%-15.5% sequential growth, which is fairly consistent with what we've delivered thus far. If you recall, Q2 was about 30%, Q3 12%, Q4 21.3%. Within that range, we expect second-half profitability on an adjusted EBITDA basis. You can see that at the low end, $85 million, that would suggest somewhere more like late Q3, Q4. At the high end, that could be Q2, Q3. If you want to take the midpoint of the guidance, we would still expect to see EBITDA profitability in the second half, Q3, to be specific.
It would be based on our business model going forward, which is $25 million-$28 million with mid-30% margins. That is what we are tracking to. That is also what we have been delivering in these past two quarters.
Eric Stine (Senior Research Analyst)
Okay. That's great. Thanks a lot.
Operator (participant)
One moment for our next question. Our next question comes from Phil Shen with ROTH Capital Partners. Your line is open.
Phil Shen (Managing Director and Senior Research Analyst)
Hey, guys. Thanks for taking the questions. First one is on the 2025 guidance. Can you share what you expect the geographic mix to be? I know for Q4, it was roughly two-thirds EMEA and then Americas 27% and then APAC 9%. Would you expect that to maintain as we go through the year?
Zvi Alon (CEO)
The answer is, in general, the answer is absolutely yes in the 65% to plus percent for EMEA and in the 30% give or take for North America. As I said before, we've seen an increase in those two regions also in the last quarter.
Phil Shen (Managing Director and Senior Research Analyst)
Okay. Thank you, Zvi. In terms of EMEA, I think on the last call, you talked about the top three countries being Germany, Italy, and the U.K. What were the top countries in EMEA for you in Q4? As we go through 2025, what would they be? Thanks.
Zvi Alon (CEO)
It's pretty much the same. It's Germany, the U.K., and Italy. We have not seen any recovery in the Netherlands, as an example. We do see some interesting activity in Eastern Europe. The top three countries are Germany number one and U.K. and Italy.
Phil Shen (Managing Director and Senior Research Analyst)
Got it. And so what is your outlook for each of these countries overall? Our sense is Germany might be a little bit flattish. I think Wood Mackenzie was sharing with us in a recent webinar that it could be down 5% in 2025 after being down 20% in 2024. But they do see Germany being down significantly in 2026 and beyond. So with Germany being such a big segment or kind of slice, how would you expect to navigate that? Maybe you disagree with the Wood Mac team as well. So can you share the outlooks for these countries? Thanks.
Zvi Alon (CEO)
We actually see in Germany a robust market, and it continues to be strong for us. The indications we are getting from the distribution is that at the level that we have been running and increasing, they maintain that they see the same continuing for the rest of the year for us. Also, the other side, which is also impressive for us, is the U.K. U.K. is really coming very strong for us.
Phil Shen (Managing Director and Senior Research Analyst)
Great. Okay. Thanks. In terms of the US outlook, there's a big debate on Powerwall 3 and the ramp-up and how that can take share from inverters and storage companies. I was wondering, is there an opportunity for you to pair your optimizers with the internal Powerwall 3 inverter? Is that, I mean, is that something that is workable now? Is that an opportunity for you? I see with the Section 48E rules that require separation to get the domestic content out of for solar and storage, it seems like there could be something there for you guys. What are your thoughts?
Zvi Alon (CEO)
Yeah. I can tell you we have seen an increase in requests from customers to go with the Powerwall 3 to use it with our products. We are paying attention to it, and we are doing our best to make sure that we obviously comply with Tesla to support it. We do have a good number of installations already with Powerwall 3. We know that in the market, it's actually working well. We will see how it continues.
Phil Shen (Managing Director and Senior Research Analyst)
Okay. Are you being paired up with your fire safety device, or is it more your optimizer, or?
Zvi Alon (CEO)
Actually, the optimizers. Actually, it's the higher-priced unit.
Phil Shen (Managing Director and Senior Research Analyst)
Great. Okay. Are you qualified to work with the Tesla inverter-only product?
Zvi Alon (CEO)
We have installations. You mean the Powerwall 2? Oh, yes.
Phil Shen (Managing Director and Senior Research Analyst)
No, meaning Tesla also sells an inverter that is separate from storage. I was wondering if you were able to be matched up with them.
Zvi Alon (CEO)
Yes, we can. The optimizers can.
Phil Shen (Managing Director and Senior Research Analyst)
Okay. Good. That is maybe an opportunity now that there's the Section 48E requirement to separate solar and storage again for domestic use.
Zvi Alon (CEO)
Yeah.
Phil Shen (Managing Director and Senior Research Analyst)
Great. And then shifting, can you share what you think? You've talked about the Predict+ and the opportunity there, and that that's growing for you. Most of your business historically has been DG, distributed generation. And so when you think about your revenue mix for 2025, what is the split between utility-scale solar and DG? My guess is utility-scale solar is a very small percentage, maybe sub 10%, 5%-ish or so. But I was wondering if you think that can grow to a much bigger percentage near term. Thanks.
Zvi Alon (CEO)
As I said in my remarks, we have seen an increase in large-scale installations. The two we mentioned were the 142 MW in Spain, which used 100,000 of our devices. We also announced another very large-scale, 97,000 devices in Brazil. We do not even release any information on systems which are in the 10, 15, 20 MW and above. We do see an increase in demand and requirements for those larger systems. I do not want to yet predict percentage-wise for the total, but I can tell you it is becoming a more significant component for us. It is true not just in the U.S. and Europe. We have seen most of our installations in Asia-Pacific, the majority are C&I and small utility-scale systems.
Phil Shen (Managing Director and Senior Research Analyst)
These are direct sales, right? It's not through distribution?
Zvi Alon (CEO)
The majority are direct sales. Sometimes we do deliver to the distribution, but the majority are direct sales.
Phil Shen (Managing Director and Senior Research Analyst)
Okay. Is the margin profile of the direct sales comparable to your sales into distribution, or is it a little bit lighter given the volume?
Zvi Alon (CEO)
What's beautiful about our product, Phil, is that it's the same product that we sell to the residential and to the large systems, and our pricing is not changing. It's the same. Actually, we've kept this price of the unit equal for the last four, five years. We didn't change it. We didn't lower the price of our product.
Phil Shen (Managing Director and Senior Research Analyst)
Great. Okay. Look forward to following that story as well. Thanks for taking my many questions. I'll pass it on.
Zvi Alon (CEO)
Thank you.
Operator (participant)
One moment for our next question. Our next question comes from Sameer Joshi with H.C. Wainwright. Your line is open.
Sameer Joshi (Senior Equity Research Analyst)
Hey, good afternoon, Zvi and Bill. Many of my questions have been answered, but just digging a little bit into the gross margins, I think, Bill, you did mention in response to one of the questions that probably your fourth-quarter gross margins were over 40%. Going forward, do you expect that level of margins? I think your guide did mid-30s during the commentary as well. I was just wondering whether 40 was sort of because of some kind of a product mix or some other reason.
Bill Roeschlein (CFO)
Yeah. I think between 35 and 40 is where we're tracking. One quarter doesn't make for a trend. Q3, again, X reserve was 36.5. Q4, X reserve was 40.2. Our trend and our product set is set up for that mid-30s, mid-to-upper 30s figure. We are comfortable with that range. The inventory reserve that we've had to take over the past few quarters have dampened that. Eliminating uncertainty around that helps to better explain what the underlying margins should be like. That's where they are.
Sameer Joshi (Senior Equity Research Analyst)
Understood. And then larger picture, you're given guidance for 2025. And we can understand the 1Q guidance. You probably have very, very good visibility on it. But for the year, what is the level of your confidence, and what areas are you looking at when you're looking at this revenue build-up?
Bill Roeschlein (CFO)
Yeah. So we've got four quarters behind us here of sequential growth. Coming out of the downturn in Q1, we had 6.5% growth. Q2, 29.6%. Q3, 12.1%. Q4, 21.3%. We're giving a conservative but realistic range here of a low point of $85 million being 8.5% sequential growth, up to $100 million being 15.5%. If you just look at what we've done over the last four quarters, you can see that I think we've done our best job to incorporate the highest probability of outcomes in 2025. The book of business continues to remain strong for us. We've got confidence that the range we're providing is a good range.
Sameer Joshi (Senior Equity Research Analyst)
Got it. This one last one, is there any likely impact of any tariffs that might materialize over the next few quarters that will impact your margins?
Bill Roeschlein (CFO)
That is a you never say never question. We moved our production for the most part, a lot of it to Thailand back in 2017, 2018 when we went through Trump version one. We have not had any indication that any of our products would be targeted in any way at this point. The best I can answer is that way.
Sameer Joshi (Senior Equity Research Analyst)
Got it. Thanks for taking my questions, and congrats on the progress.
Zvi Alon (CEO)
Thank you.
Operator (participant)
At this time, this concludes our question-and-answer session. I'd like to turn the call back over to Mr. Alon for his closing remarks.
Zvi Alon (CEO)
Thanks again, everyone, for joining us today. I especially want to thank our dedicated employees for their ongoing contribution, as well as our customers and partners for continued hard work. I also want to thank the investors for their continued support. Operator?
Operator (participant)
Thank you for joining us. Thank you for joining us today. Thank you for joining us. One moment. We do have another person at queue for a question. Our next question comes from Gus Richard with Northland. Your line is open.
Gus Richard (Managing Director)
Yes. Thanks for asking. Thanks for letting me ask a question. Sorry to be a five o'clock Charlie. Just real quick on the gross margins. I think that's a record for you all. And I just was wondering, what drove such strong performance in gross margins in the quarter?
Bill Roeschlein (CFO)
There's a couple of points. We continue to improve our cost and our product. A lot of work continues to go into costing down the cost of the product. We continue to expand margin. That's just a continual process that we do. We've introduced the X as well. The X provides a very healthy margin. The family of TS4 for us is just on a variable basis, very attractive margins. When you get a quarter where you're selling most of the product is these TS4s, you're going to get the high margins that you're seeing here.
Gus Richard (Managing Director)
Got it. You recently signed a—we've gone on an approved vendor list at a large company. I'm just wondering, is some of the visibility that you're getting just channelful for that customer? I just want to sort of wrap my mind around the visibility for the full year given how dynamic the environment is.
Zvi Alon (CEO)
Our visibility, I guess if we talk about EMEA, is coming from the three countries I mentioned with the very strong distributors and very sizable distributors there, which provides us confidence as far as the continuation. Obviously, we've seen also an increase in footprint in the US. No, we did not rely just on this last one we signed, even though it will be a contributor as it evolves and continues to grab additional footprint within our offering. My point is that the visibility is not just based on that one.
Gus Richard (Managing Director)
Got it. And then just last one for me. In terms of sell-in versus sell-out and the health of the channel, can you just comment on what you see geographically?
Zvi Alon (CEO)
I can tell you that I believe that 100% of all the orders we've received for the last two-plus quarters are brand new into inventory, which is getting depleted almost in no time. We don't have much leftover or any additional inventory in the channel.
Gus Richard (Managing Director)
Okay. All right. Thank you for squeezing me in. Sorry again for being late.
Zvi Alon (CEO)
Most welcome.
Operator (participant)
Mr. Alon, were you finished with your closing remarks?
Zvi Alon (CEO)
Yes, I am.
Operator (participant)
Okay. I just want to thank everyone for joining us today for Tigo's Fourth Quarter 2024 Earnings Conference Call. You may now disconnect and have a wonderful day.