Enphase Sees Fourth-Quarter Revenue of $225 Million to $255 Million
Key Facts
Enphase set fourth-quarter revenue guidance at $225 million to $255 million, compared with analysts’ estimate of $300.5 million, a forecast that dims the sales outlook after a third quarter that came in below market estimates. The company said its guidance assumes a 10% decline in sell-through from the third quarter and includes shipments of 100 to 120 megawatt-hours of IQ batteries and about $51.2 million in safe-harbor revenue. EL7 data showed the stock closed at $29.76 on Oct. 27, versus $30.36 in the previous session, a decline of about 2.0% between the two closes. In after-hours trading on Oct. 27, the stock fell 14.3%, according to Investing.com. The guidance follows third-quarter revenue and earnings per share that came in below analyst consensus.
Enphase reported third-quarter revenue of $293.33 million, compared with an estimate of $303.85 million, while earnings per share came to $0.41 versus a forecast of $0.51, according to Investing.com. Year over year, revenue fell from $410.427 million in the third quarter of 2025 to $293.329 million in the same period of 2026. Operating income under the company’s non-GAAP measure was $53.6 million, down from $56.7 million in the second quarter. The company said an impairment of investments reduced diluted earnings per share by $0.15 under GAAP and $0.14 under its non-GAAP measure. Despite the gap from estimates and the annual revenue decline, the company recorded positive income for the quarter; its results did not show a loss.
Across markets, revenue in the United States rose 3% from the second quarter, but the company said the increase was below expectations because of weak demand for residential solar. In Europe, revenue fell 11% quarter over quarter, weighed by summer seasonality and weakness in some markets. Global sell-through rose just 1% from the previous quarter, short of the company’s expectation for 10% growth. U.S. sell-through rose 5% quarter over quarter but remained 35% below its level a year earlier, while European sell-through fell 12% quarter over quarter. The company reported notably weak demand in France within the European market.
The company attributed some of the weakness in U.S. residential demand to high interest rates and the expiration of the federal tax credit under Section 25D. Chief Executive Officer Badri Kothandaraman said, "Our core residential solar market in the United States continues to face headwinds from high interest rates and the expiration of the federal tax credit under Section 25D." Non-GAAP gross margin fell to 45.0% in the third quarter from 46.8% in the second quarter. Enphase attributed the decline to product mix and said reciprocal tariffs reduced margin by about 1.3 percentage points, compared with about 2.0 points in the previous quarter. The company expects gross margin of 40% to 43% in the fourth quarter, including an impact of about two percentage points from reciprocal tariffs.
Enphase had $931.8 million in cash, cash equivalents and marketable securities at the end of the third quarter, while operating cash flow was about $0.1 million. The company spent $11.5 million on capital expenditures, compared with $14.4 million in the second quarter. In its storage business, Enphase shipped 129.9 megawatt-hours of IQ batteries, up from 113.8 megawatt-hours in the previous quarter. The number of certified battery installers worldwide also exceeded 26,000, up from more than 25,000 in the second quarter. The fourth-quarter outlook combines a revenue range below market estimates with expected battery shipments below the third-quarter level.
Beyond pressure on its residential business, Enphase outlined a product roadmap for IQ SST, which is tied to power applications for data centers. The company said its customer and partner pipeline for the product more than doubled during the quarter to more than 50 opportunities. In an October technical demonstration, it showed conversion from 13.8 kilovolts AC to 800 volts DC using 132 power modules. The company aims to validate operation at 34.5 kilovolts and demonstrate a megawatt-scale system by the end of 2026. It also said it is seeking customer trials in 2027, with commercial shipments set to begin in 2028.