Enphase Energy, the US-based solar PV microinverter and battery systems supplier, started 2025 with meeting its revenue guidance for Q1. It earned $356.1 million that represents more than 35% year-on-year (YoY) increase.
The US market remains the company’s breadwinner as it represented 74% of the revenue mix for the reporting quarter even as seasonality and softening in customer demand decreased the region’s revenues by 13% sequentially. It was partially offset by safe harbor revenue of $54 million.
Enphase says that installations in the US were also impacted by the financial challenges faced by one of the large national lease providers as they navigate the high interest rates. While the management did not name this company, TD Cowen’s Jeff Osborne identifies it as Sunnova that recently issued a going concern warning (see Sunnova Narrows Net Loss For FY2024; Issues Going Concern Warning).
In Europe, its other large market, Enphase sees the business environment as challenging even as the management continues to introduce new products here. These include IQ EV charger in the Netherlands and France. It also plans to introduce hot water heater compatibility in Q2 in France.
“Over the coming months, we plan to introduce our full product portfolio across more of Europe, including IQ microinverters, IQ battery flex space with backup, our latest in the greater EV charger, AI-powered energy management software and the solar graph installer platforms,” stated the management on a call with analysts to discuss the Q1 2025 financial results.
It shipped close to 1.53 million or 688.5 MW DC of microinverters during the reporting quarter, and 170.1 MWh of IQ batteries. These comprised around 1.21 million microinverters and 44.1 MWh of IQ Batteries made in the USA.
Management is not worried about the newly announced 145% tariffs on products from China, in addition to the 10% reciprocal tariffs on imports from other countries on its microinverters and accessories attributing it to a diversified supply chain. However, these tariffs will impact the company’s battery business since it currently sources battery sell-backs from China. It has factored in this impact on its Q2 2025 guidance but says the effect will be limited in the quarter since it has pre-tariff inventory.
“We are moving quickly to realign our supply chain to minimize downside across a range of scenarios,” said Enphase Energy President and CEO Badri Kothandaraman.
Roth’s Managing Director, Sr. Research Analyst Philip Shen observes that the company has to navigate the tariffs over the next few quarters, unless of course Trump meaningfully lowers the China tariffs, which may not be too far away as the US President recently announced ahead of the negotiations with China.
Guidance
For Q2 2025, Enphase forecasts its revenues within a range of $340 million to $380 million, comprising around $40 million of safe harbor revenue. This also includes shipments of 160 MWh to 180 MWh of IQ Batteries. Management said it is about 80% booked to the midpoint of the revenue guidance, and expects to be ‘100% booked soon’.
It also guides for net Inflation Reduction Act (IRA) benefit within a range of $30 million to $33 million, based on estimated shipments of 1 million units of US manufactured microinverters.
GAAP operating expenses will be within a range of $136 million to $140 million. It also guides for GAAP gross margin of 42% to 45% with net IRA benefit, including approximately 2 percentage points (pp) of new tariff impact.
