Enphase Energy NASDAQ: ENPH reported first-quarter 2026 revenue of $282.9 million, shipping 1.41 million microinverters and 103.1 megawatt-hours (MWh) of batteries, while generating $83 million of free cash flow. The company said results included $34.5 million of “safe harbor” revenue and that it ended the quarter with channel inventory “above normal levels” for both microinverters and batteries.
On a non-GAAP basis, Enphase delivered gross margin of 44%, operating expenses of 27% of revenue, and operating income of 17% of revenue, according to President and CEO Badri Kothandaraman. Chief Financial Officer Mandy Yang added that non-GAAP gross margin was 43.9% in Q1, down from 46.1% in Q4.
Quarterly results and cash flow
Yang said GAAP gross margin was 35.5% in Q1 versus 44.3% in Q4, pressured by two main items. First, GAAP gross margin was “negatively impacted by 6.7 percentage points” from the sale of 2025 production tax credits (PTCs) totaling $235 million that were sold at 93% of face value. Yang said this created a discount of roughly $16.5 million plus about $2.5 million in transaction-related fees. Second, reciprocal tariffs reduced gross margin by 4.3 percentage points in Q1.
Non-GAAP operating expenses were $77 million, compared with $78.8 million in Q4. On a GAAP basis, operating expenses were $130 million and included $45.4 million of stock-based compensation, $3.8 million of acquisition-related expenses and amortization, and $3.8 million of restructuring and asset impairment charges.
Enphase posted non-GAAP net income of $62.3 million, or $0.47 in diluted EPS, compared with $93.4 million, or $0.71, in Q4. On a GAAP basis, the company recorded a net loss of $7.4 million, or a loss of $0.06 per diluted share, compared with GAAP net income of $38.7 million, or $0.29 per share, in Q4.
The company ended the quarter with $930.6 million in cash, cash equivalents, and marketable securities, down from $1.51 billion at the end of Q4. Yang said Enphase settled $632.5 million of outstanding principal related to convertible notes due March 1, 2026, using cash on hand. The company did not repurchase common stock in the quarter, though it had about $269 million remaining under its authorization.
Demand trends, inventory, and regional commentary
Kothandaraman said Enphase’s U.S. and international revenue mix was 83% and 17%, respectively. In the U.S., he said revenue declined 23% sequentially, driven by “lower residential solar and battery demand following the expiration of 25B tax credits and typical seasonality.” The CEO added that overall sell-through fell 48% sequentially after Q4 was “elevated by significant demand pull forward ahead of the tax credit expiration,” while Q1 2026 sell-through declined 18% compared with Q1 2025.
Channel inventory exiting Q1 was “mostly the U.S.,” management said during Q&A. For Q2, Kothandaraman said the company plans to “under ship approximately $25 million compared to the real demand” to correct for Q1’s overshipment.
In Europe, Kothandaraman said Q1 revenue increased 36% versus Q4 as sell-in rose toward sell-through levels after the company “undershipped the European channel in Q4.” He also pointed to “green shoots” in April, citing healthy double-digit increases in solar and battery activations across multiple European markets versus Q1 monthly averages, driven by rising power prices and increasing battery adoption.
- Netherlands: battery activations in April were up approximately 75% compared with Q1 monthly run rate, supported by rising export penalties and a planned phase-out of net metering by end of 2026.
- France: battery activations rose about 20% in April versus the Q1 monthly run rate, with management citing reduced feed-in tariffs shifting the market toward self-consumption.
- Germany: battery activations increased about 27% in April compared with Q1’s monthly average.
Competition in Europe remains “intense,” particularly from low-cost string inverter and battery providers, the CEO said. In response, Enphase plans to reduce distributor list prices for batteries by about 10% in May, following a 20% microinverter list price reduction implemented in December.
Outlook: safe harbor and Q2 guidance
For the second quarter, Enphase guided revenue of $280 million to $310 million, including approximately $85 million of safe harbor revenue, with battery shipments expected to be 100–110 MWh. Yang said Enphase expects GAAP gross margin of 42%–45% and non-GAAP gross margin of 44%–47%, each including about 3 percentage points of reciprocal tariff impact.
During Q&A, Kothandaraman said safe harbor revenue in Q3 is “difficult…to estimate,” but offered an opinion that it could be “between $40 million–$50 million.” He also said Q1 results and Q2 sell-through expectations are roughly 10%–15% below the company’s prior view due to “unfavorable weather conditions and TPO financing challenges.”
Financing initiatives and product roadmap
Management emphasized a prepaid lease initiative called Propel, described as a TPO-led program using Enphase equipment and being field-tested with loan and distribution partners. Kothandaraman said the pilot expanded from 40 installers at the time of the February earnings call to more than 200 installers across four states, with a run rate of roughly 200 net originations per week. He added that battery attachment on those originations is about 84%, and the company expects to complete pilots this quarter and begin broader expansion in July after validating customer experience, installer execution, and financing performance.
On product development, Enphase reiterated timelines for multiple launches. Kothandaraman said the company expects to begin pilots for its fifth-generation AC-coupled battery in Q3 and begin shipping in Q4. The company also said it is making progress on IQ Vault, an 80 kWh AC-coupled commercial battery for small and medium commercial markets, with pilots expected to begin in Q1 2027.
In microinverters, Enphase highlighted early commercial momentum. Kothandaraman said U.S. commercial microinverter sales “more than doubled” in Q1 compared with Q4, driven by reception for IQ9. The company expects to begin shipping its high-power 480W IQ9S microinverter for 480-volt three-phase systems in Q3 and expects to introduce IQ9 for global residential markets during the current quarter. In Q&A, management said commercial and industrial (C&I) revenue in Q1 was “in the high single digits,” a bit above $5 million, while noting the business can be lumpy.
Solid-state transformer initiative for AI data centers
Enphase also detailed a new product under development: the IQ Solid-State Transformer (IQ SST) for AI data centers. Kothandaraman said AI is driving rack power from roughly 150 kilowatts to more than 1 megawatt and that the industry is moving toward higher-voltage DC architectures. He estimated the initial annual U.S. addressable opportunity for IQ SST in AI data centers could exceed 11 gigawatts by 2031.
According to Kothandaraman, IQ SST is designed to convert medium-voltage AC directly to low-voltage DC in a single stage and use a distributed modular architecture. He said Enphase has engaged with more than 20 prospective customers, completed feasibility work, built working power modules, and converged on a system design. The company expects a full system demo later this year, customer pilots in 2027, and volume shipments in 2028. Chief Products Officer Raghu Belur said the approach leverages Enphase’s experience with distributed architectures, including “sub-millisecond response times,” modular redundancy, and serviceability.
Separately, Yang said Enphase submitted approximately $50 million of tariff refund claims following a U.S. Supreme Court ruling related to certain tariffs under IEEPA and the launch of a U.S. Customs portal. She said the company currently expects refunds within 90 to 120 days, subject to approval.
About Enphase Energy NASDAQ: ENPH
Enphase Energy is a global energy technology company that specializes in solar microinverters, energy storage systems and energy management software. Its core business centers on converting direct current (DC) power generated by solar panels into alternating current (AC) power suitable for use in residential and commercial applications. By integrating hardware and software solutions, Enphase Energy aims to improve solar energy yield, enhance system reliability and provide real-time monitoring capabilities to its customers.
The company's product portfolio includes its IQ Series microinverters, which attach to individual solar panels to optimize performance at the module level and reduce the impact of shading or system failures.
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