Tigo Energy Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 6, 2025

There are 7 speakers on the call.

Operator

Good afternoon. Welcome to TIGO Energy's Fiscal First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Joining us are today from Svi Alon, CEO, and Bill Rauschlein, CFO.

Operator

As a reminder, this call is being recorded. I would now like to turn the call over to Bill Rauschlein, chief financial officer.

Speaker 1

Thank you, Corinne, and it's a pleasure to join you from our corporate offices in Campbell, California. Also with us is Violon, our CEO, who is joining us from the Intrarsolar Conference in Munich, Germany. I'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 demand for our products, competitive position and market share the impact of tariffs, our current and future inventory levels charges, reserves and their impact on future financial results inventory supply and its impact on our customer shipments statements about our revenue and adjusted EBITDA for the second quarter of twenty twenty five and our revenue for the full year of fiscal year twenty twenty five our ability to penetrate new markets and expand our market share, including expansion in international markets 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 these those factors that are described in today's press release and discussed in the Risk Factors section of our most recent annual report on Form 10 ks, our quarterly report on Form 10 Q for the fiscal quarter ended 03/31/2025, and other reports we may file with the SEC from time to time.

Speaker 1

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 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 eight ks. The non GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP.

Speaker 1

Finally, would like to remind everybody that this conference call is being webcast, and a recording will be made available for replay on TIGO's Investor Relations website at investors.taigoenergy.com. With that, I'd like to now turn the call over to TIGO's CEO, Zvi Alon. Zvi?

Speaker 2

Thank you, Bill. To begin today's discussion, I will highlight key areas in our recent financial and operational performance and briefly address the current macroeconomic developments before turning the call over to our CFO, Bill Rochelein. He will discuss our financial results for the first quarter in more depth as well as provide our guidance for the second quarter and the full year of 2025. After that, I will share some closing remarks, tell you about our outlook and then open the call for questions from you and the analysts. I am pleased to report that we ended the first quarter of twenty twenty five with our fifth increase in sequential quarterly revenue growth, growing 9.1% sequentially and 92.2% on a year over year basis.

Speaker 2

In the first quarter of twenty twenty five, we reported a total revenue of $18,800,000 and shipped 502,000 or 351 megawatts of MLP. I'm exceptionally proud of what our team here at TIGO has accomplished. To give some geographical color on our results, we saw positive sequential sales growth in EMEA, The Americas and APAC regions. Within EMEA, the EMEA region, the recovery that began for us as a year ago has now broadened as we saw much stronger results from Italy and The Netherlands. In addition to both, The Americas and Asia Pacific regions also grew sequentially in the first quarter.

Speaker 2

I'm also excited about our recently introduced 22 amp t s four a series, now serving panels up to 725 watts and joining the t s four x family with the highest safety solution, including the unique TIGO multifactor rapid shutdown, demonstrating our commitment to stay ahead of the module performance curve. Given the current developments in Washington, many of you are likely interested in how the latest reciprocal tariff decisions may impact us. As you may know, the majority of Tiger's revenue occur outside of The United States. Based on the current reciprocal tariffs announced, we estimated that approximately 5% of our Q1 revenue would have been affected by the China reciprocal tariff of 145%. We also estimate that approximately 15% of our Q1 revenue would have been affected by 10% of the rest of the world reciprocal tariff.

Speaker 2

We are currently working with our supply chain partners to mitigate the effects of these reciprocal tariffs where possible. And with that, I will turn it over to Bill. Bill?

Speaker 1

Thank you, Zvi. Turning now to our financial results for the first quarter ended 03/31/2025. Revenue for the first quarter twenty five twenty twenty five increased 92.2% to $18,800,000 from $9,800,000 in the prior year period. On a sequential basis, revenues increased 9.1% with improved results coming from many countries in the EMEA and APAC regions, including Italy, Czechia, The Netherlands and The Philippines. By region, EMEA revenue was $11,500,000 or 61.3% of total revenues.

Speaker 1

Americas region Americas revenue was $4,700,000 or and APAC revenue was $2,600,000 or 13.6% of total revenues. By product family, for the first quarter of twenty twenty five, MLPE revenue represented $16,000,000 of revenue or 84.8% of total revenues. OESF represented $2,000,000 or 10.7% of total revenues, and PREDICT plus and licensing revenue represented $800,000 or 4.5% of total revenues during the quarter. Gross profit in the first quarter of twenty twenty five was $7,200,000 or 38.1 percent of revenue compared to a gross profit of $2,800,000 or 28.2% of revenue in the comparable year ago period. Operating expenses for the first quarter declined 5.9% to $11,200,000 compared to $11,900,000 in the prior year period.

Speaker 1

The decline was driven primarily by our previously announced cost cutting efforts. Operating loss for the quarter decreased by 56.2% to $4,000,000 compared to $9,100,000 in the prior year period. GAAP net loss for the first quarter was $7,000,000 compared to a net loss of $11,500,000 in the prior year period. Adjusted EBITDA loss in the first quarter decreased 67.4% to $2,000,000 compared to an adjusted EBITDA loss of $6,300,000 in the prior year period. These results reflect progress towards profitability on a non GAAP basis as previously announced.

Speaker 1

As a reminder, adjusted EBITDA loss 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 and A transaction expenses. Primary shares outstanding were $61,900,000 for the first quarter of twenty twenty five. Turning now to the balance sheet. Accounts receivable net increased this quarter to $10,400,000 compared to $8,000,000 last quarter and increased from $6,300,000 in the year ago comparable period. Inventories net decreased by $3,100,000 or 14.1% to $18,900,000 compared to $22,000,000 last quarter and $55,800,000 in the year ago comparable period.

Speaker 1

Cash, cash equivalents and short and long term marketable securities totaled $20,300,000 at 03/31/2025. On a sequential cash sequential basis, cash increased by 400,000.0 as we continue to make progress on reducing our inventory and working capital. Turning now to our financial outlook for the second quarter of twenty twenty five and full year of 2025. As a reminder, TIGO provides quarterly guidance for revenue as well as adjusted EBITDA as we believe these metrics to be key indicators for the overall performance of our business. For the second quarter of twenty twenty five, we expect revenues and adjusted EBITDA to be in the following range.

Speaker 1

We expect revenues in the second quarter ended 06/30/2025, to range between 21,000,000 and $23,000,000 We expect adjusted EBITDA to range between negative $1,500,000 and positive $500,000 For the full year of 2025, we are reiterating our previous guidance of revenues of between 85,000,000 and $100,000,000 That completes my summary, and I'd like to now turn the call back over to Zvi for final remarks.

Speaker 2

We look ahead. I'm happy to say that even against the backdrop of the economic uncertainty, we believe that our track record of five consecutive quarters with top line growth will continue for the remainder of 2025 as demand for our solutions continue to return. We firmly believe in the growth prospects for our business and look forward to providing additional updates in the coming quarters. With that, operator, please open the call for q and a.

Operator

Thank you. At this time, we would like to conduct the question and answer session. To ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q and A roster.

Operator

Eric Stine of Craig Hallum Capital Group. Your line is now open.

Speaker 3

Steve. Hi, Bill.

Speaker 1

Hey, Eric. Hello.

Speaker 3

Hey. Hello. So curious, I mean, obviously, a nice recovery you're seeing in actually across all your markets. But when you think about this, I mean, how do you break this down between just improving conditions with your current distributors and direct sales versus market share gains? Because clearly, this is a little bit of both.

Speaker 3

Would love your thoughts on how that breaks down between the two.

Speaker 2

Outstanding question, Eric. Thanks for asking it. I will share that we continue to see current existing distributors, which are very strong, increasing their footprint with us, and becoming much more bullish on, the market requirements. Similarly, our efforts with going directly to at least promoting the products with system integrators and large EPCs is paying very nice dividends. And, I can tell you that, majority, I would say, of our growth is coming from an increased market share, we believe, even though it's the same exact distributors, and that's what we hear from them.

Speaker 2

At least I would, not mention any names, but two or three of them mentioned specifically that, we have increased the footprint within their portfolio substantially above any other competitor.

Speaker 3

That's good color. I mean, do you attribute that to just a broader product offering, the fact that this can be used residential, C and I, utility scale? You know, is it is it price? Is it kind of all of the above?

Speaker 2

So I can tell you that, I'll I'll touch the price first. We have not changed price at all, and we have been consistent on that front. We introduced the TS4X family at a higher price, and we see a nice increase increase for those products for a different market, which is accepting it so far. But as far as the t s four a product, price was not an issue. Now, I can tell you that many factors are helping us gain market share.

Speaker 2

One, the number of SKUs is very small. We have a single optimizer that covers basically the whole market. Not only that, it's the highest powered rating, which is the current shipping version is 700 watt or 800 watt, and we just announced the seven twenty five, watt, and working for essentially all three market segment. Number three, I would say, we are bill I believe we are the only company with a backward compatibility of the current shipping products to products we shipped seven, eight, nine years ago, exactly identical. If you have any failure with an old product, which they sometimes do happen, you don't need to go and get the same exact part number.

Speaker 2

You can just buy any one off the shelf and replace it or get an RMA from us, and you'll get a new product to replace it. Also, the fact that our product works with pretty much any inverter out there is also a major contributor. So all in all, oh, I would mention one more thing. Our installation time of the MLP product is superb. It's about ten seconds per PV module.

Speaker 2

It's unheard of. I mean, literally, just slide the unit on the panel, connect the wires, and you're done. So all those factors together, the more people get to experience, the more they buy into it and and wanna do more. And, I can tell you that the amazing part for us also is that we see larger number of fields being shipped to large EPCs installers as they become much more aware and successful with those products.

Speaker 3

Got it. Thank you very much for that. And then I guess for my last question, then I'll turn it over. Just curious, I mean, came down a little bit here in the quarter, but I also know that in Q1, you were expecting some audit fees and some other onetime items. So just curious, I mean, your guidance and the fact that at the upper end, positive adjusted EBITDA would imply that OpEx, we should think of it lower.

Speaker 3

So just curious if you can give any color on that.

Speaker 1

So in general, there's two levers to think about in the guidance and projections for the year as you build out your model. We are tracking at a high gross margin. We're seeing that both in our MLP business as well as the lack of having a drag on the margin from our Go ESS product line, which we did a large reserve for last quarter. So combining those the combination of both should lead to some gross margin uplift as we look later into the year. So 38 plus.

Speaker 1

I would I would put it more closer to 40. And OpEx would, you know, conservatively speaking, between eleven and twelve, maybe midpoint 11 and a half, is, I think, the fair range. You know, we were eleven and eleven point two left at q one, but we were also 11.5 in in q four. So there's a little bit of variability there. But, when you model that out, you'll you'll come up with numbers for the adjusted EBITDA that are in the range that we guided to.

Speaker 3

Okay. Alright. Thank you very much.

Speaker 2

Thank you.

Operator

Thank you. Our next question comes from Philip Shen Partners. Your line is now open.

Speaker 2

Phil.

Operator

One moment for our next question. Our next question comes to us from Sameer Joshi of H. C. Wainwright. Congrats

Speaker 4

on a good quarter.

Speaker 2

Thank you.

Speaker 4

Actually, in your prepared remark, you mentioned 5% of revenues would have been impacted by 145% tariff and 15% by 10% tariff. Other back of

Speaker 2

the envelope suggest this would

Speaker 4

be around one point eight to two million. Should we dollar. Should we expect that level of impact going forward? And then how does that mesh with the sort of increased gross margin that you have seen recently?

Speaker 1

So I would characterize it this way. The US represented about 22% of our revenues. And within that, you've got 15% of that that is our MLPE products that are made outside of China and in Thailand that are subject to the reciprocal tariffs, and we'll see what happens after the ninety day that's with ninety day review. And then that leaves 5% that's subject to the the China tariffs, but that includes both inverter and batteries. And we are working on our supply chain and have the opportunity to move some of that specifically in the inverter side outside of China.

Speaker 1

So that would negate much of that five percent. And then the rest of it is batteries, which are sourced in China, but we have a large inventory position in The U. S. Already. And so that also negates the tariffs on that.

Speaker 1

So combining all of that, we don't see a substantial impact of the tariffs on our business, at least for the second quarter. And we're gonna leave it quarter to quarter because, you know, the world seems to change so fast on this front.

Speaker 4

Yeah. No. You answered my part two of the question, which was the inventory. How much of it will support, the second quarter? So it seems you have enough inventory that is pre tariff that can support your business in the second quarter.

Speaker 1

Correct.

Speaker 4

And then the the April 24 off grid product offering that you are the solar package that you're offering, Is there like, where is this demand for, off grid, that you are seeing from? Like, is it mainly businesses? Or because you the press release also mentioned residential. And so just was curious, how large is that demand and from where are you seeing that demand?

Speaker 2

There there is a substantial regional region, actually, a couple who like, to be off grid, and they're in the Midwest and and some South. And that's what we were aiming at. And we started seeing some fairly good success, so we have packaged that solution for that one specific market. If you check, who else are providing solutions which are also of grid, it is becoming an increased number of, suppliers. So we we are sure we are not going to stay the only one,

Speaker 5

and we are

Speaker 2

not right now. But for us, it's a growing segment that we've not touched before.

Speaker 4

Understood. And then just last one. The second quarter guidance implies that your second half revenues are likely to be 46,000,000 to $59,000,000 just by at the midpoint of 2Q guidance. Do you have visibility? And how much confidence do you have in that outlook for a strong second half?

Speaker 2

I can tell you that by we don't have specific orders going out more than a couple of quarters, maybe in some very small cases, a little bit more, but majority are really for the current quarter and the next quarter. But on on the other hand, we know how and we do talk to our distributors, and we know how the markets behave and what their expectations are. And so we factor it in in addition to, obviously, what we know about the market. And we have been so far accurate for the last five, six quarters with our projections. So we are fairly confident.

Speaker 2

I can tell you that our backlog increasingly, we don't share quite those numbers, but increasingly over the last two or three quarters grew from one quarter to the other. And, as we got into the current quarter, we felt much more confident on, even increasing the numbers, the guidance.

Speaker 4

Understood. That sounds good. Thanks a lot for taking my questions.

Speaker 2

Most welcome.

Operator

Thank you. As a reminder, to ask a question, please press 11 on your telephone. Our next question comes from Philip Shen of Roth Capital Partners. We

Speaker 5

went through the 10 Q quickly. We saw that there's the going concern language. You have the $50,000,000 convert, I think, January 1 or sometime in January of twenty twenty six. Can you talk to us about the situation there? How do you expect to manage the 50,000,000 due?

Speaker 5

How flexible would you expect your your convert counterparty l one energy to be? Thanks.

Speaker 1

Yeah. Our our the counterparty is very is being very flexible and cooperative and and is, you know, big supporter of Tygo. And that being said, we are working on on a refinance. And I'm sure you can appreciate, you know, when we have something announced, we'll we'll announce it. But rest assured, we are diligently working to, you know, to address the maturity on that.

Speaker 5

Okay. Thanks, Bill. From a cash standpoint, you guys have an annual guide. And so if you hit the midpoint of that guide, how much free cash flow generation do you think you can have?

Speaker 1

So on go forward basis, we're looking at EBITDA positive. If not in Q2 guide, then for '3 and '4, we would expect that based on the annual guide. The the the overall cash position is, I would say, probably gonna be flattish to slightly up. We are in a replenishment mode on some of the inventory, especially on MLPE. And, so there's gonna be some consumption there that, some of the some of the cash flow generation is gonna be used for for working capital for that purpose.

Speaker 1

So, we're thinking of of cash sort of in the a bit a bit range bound in this lower twenties level.

Speaker 5

Okay. Great. Thanks. And then as it relates to Europe, Intrarsolar is about to kick off, I think, tomorrow. Are you guys there?

Speaker 5

I know Europe is a big part of your business. And so what are you hoping to accomplish, you think, at that show? Thanks.

Speaker 2

We we are at full swing. We have, our team ready. We have a very nice booth set, and we actually have a very interesting and busy schedule already already from, partners, distributors, as well as customers. And, it's interesting, but, we are all pretty much booked. We didn't, have much left, to allocate.

Speaker 2

So we're very happy with what's going on right now.

Speaker 5

Thanks, V. And then, in terms of distributors, I've been hearing that, some of the pan European larger distributors might be having issues with a trend where more of the local distributors are developing a greater influence with the installer base. Are you seeing something similar? And so, you know, how might you adjust your your strategy to sell into Europe? I don't know if this plays a factor at all, but what are your thoughts on this dynamic?

Speaker 5

Thanks.

Speaker 2

So what we we've seen two phenomenas. First of all, big picture, the total number of distributors we have did not shrink much even with all those guys that went out of business. We actually replenished some of them fairly quickly with others, and some came back for almost, instincts. So, we were very happy for them to be able to actually survive. Now to the question itself, we do see a phenomenon in which the very large distributors are starting to sell to some local distribution.

Speaker 2

And so we have seen that, happening in a few places. We are not necessarily encouraging it or discouraging it, but it helps us keep a footprint which is much wider. And for the smaller original ones, they don't necessarily are able to hit the the same discount level as the large ones. So that mechanism we have in place, which we are rigidly following, is working for us, and it serves pretty much all of them. And so we don't we don't think we need to make any changes right now.

Speaker 2

Yeah.

Speaker 5

Got it. And so when you see the large distributors selling products to the smaller ones or local ones, what kind of products are we talking about? Modules, inverters, MLPE, yours your your products, or is it more focused on storage or some other category?

Speaker 2

No. The majority the majority we see is in the line of, inverters, MLPE, and some PV modules. On the battery side and ESS, not much. Not much at all, I would say.

Speaker 5

Got it. Thanks, Sadiq. And then You're most welcome. In in terms of, maybe the last one here for me. The China tariff in The US, Hundred Forty Five Percent.

Speaker 5

The biggest impact I see is on cell packs for batteries coming into the country. And I wanted to just check-in. Maybe you already addressed this. Sorry if I missed this. But what's the impact for you guys?

Speaker 5

Do you already have a lot of inventory in country in The US so that that's less of an issue? Or if it is a bit of an issue, what are you guys doing to mitigate

Speaker 2

that surge? Thanks. So for the foreseeable future, I would say the next few quarters, we're in good shape with the inventory we have. And and we are getting ready for a neck the next generation, which is addressing the sources of the suppliers. And so we would not be exposed to as to China as much.

Speaker 2

But as you know, China controls a very large part in in the market. And so I'm not sure we can avoid it completely, but we have other sources.

Speaker 5

Good. So for now, you guys have some insulation maybe a few quarters. That's a fair that's a fair amount of time. So but as you burn through that inventory, you do need to start now or soon in diversifying your cell pack geographic sourcing. And so That's the world is trying to do this or at least most of The US.

Speaker 5

And so, what countries are you trying to go to? Is it Korea? Is it Japan? What are the countries

Speaker 2

It's those those two that you mentioned exactly. And, also, yeah. It seems like also some of the Chinese guys are also actually also looking for other sales from other places. So we don't know exactly how it's going to all work out, but Korea and Japan are the two main, areas for us.

Speaker 5

Okay. Great. Best of luck in that transition and and with the rest of the year. Thank you, and I'll pass it on.

Speaker 2

Thank you much. Thanks, Phil. Are you in Germany?

Speaker 5

Not this time around given the earning season.

Speaker 2

Oh, okay. No problem. Yep.

Speaker 5

Sorry to miss you. Thanks.

Speaker 2

Mhmm. Sorry.

Operator

One moment for our next question. Our next question is Matheson of Sidoti and Company. Congratulations

Speaker 6

on the quarter, gentlemen.

Speaker 1

Thank you.

Speaker 6

Just turning to the demand side. You've reported increased sequential growth in all regions, but just working out some arithmetic, it looked like EMEA was a little bit stronger in growth. Is that accurate?

Speaker 1

Yes. We had most growth from APAC region in the quarter, but they represent the smallest of the three regions for us, followed by EMEA and then Americas.

Speaker 6

Can you release any growth figures for The Americas?

Speaker 1

It's, you know, it it's not it's growing a little bit more than what the market estimates are. I mean, it's certainly low low to mid single digits, I mean, if that helps.

Speaker 2

Mhmm.

Speaker 1

So it's not it's certainly not the you know, we we did 9%. It certainly it didn't carry the day for the 9%. Got it. Alright.

Speaker 6

Well, thank you for the information, and good luck in the coming quarter.

Speaker 2

Thank you so much. Thank you so much.

Operator

Thank you. At this time, our this concludes our question and answer session. I'd now like to turn the call back over to Mr. Elan for his closing remarks.

Speaker 2

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 their continued hard work. I also want to thank our investors for their continued support. Operator?

Operator

Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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Key Takeaways

  • Revenue growth: Q1 revenue was $18.8 million, up 92.2% year-over-year and 9.1% sequentially for the fifth consecutive quarterly increase.
  • Regional performance: Positive sequential sales growth occurred across all regions with EMEA leading (61.3% of revenues) driven by recoveries in Italy and the Netherlands, while the Americas and APAC also expanded.
  • Profitability progress: Gross margin improved to 38.1% from 28.2%, operating expenses fell 5.9%, reducing the operating loss by 56.2% and adjusted EBITDA loss by 67.4% year-over-year.
  • Guidance reaffirmed: Q2 revenue is expected between $21 million and $23 million with adjusted EBITDA of –$1.5 million to $0.5 million; full-year revenue guidance remains $85 million to $100 million.
  • Tariff mitigation: Reciprocal tariffs could have affected about 20% of Q1 revenue, but inventory management and supply-chain shifts aim to minimize impacts in upcoming quarters.
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Earnings Conference Call
Tigo Energy Q1 2025
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