Enphase Expects Fourth-Quarter Revenue of $225 Million to $255 Million
Key Facts
Enphase Energy expects revenue of $225 million to $255 million in the fourth quarter of 2026, according to its third-quarter results statement. The midpoint of $240 million is well below the analyst consensus of $300.5 million, according to Investing.com. The range comes as pressure continues in the residential solar market, which the company said is facing higher interest rates and the expiration of the federal tax credit under Section 25D. The guidance also reflects an assumed decline in the sell-through rate, while growth in that rate in the third quarter fell short of the company's expectations. Conditions diverged further by region: the United States recorded a limited improvement in the sell-through rate, while the rate declined in Europe. These factors put the fourth-quarter outlook in the context of weak underlying demand weighing on residential activity.
Third-quarter diluted earnings per share were $0.17 on a U.S. GAAP basis and $0.41 on a non-GAAP basis, according to Enphase's statement. The company said an impairment of its investments reduced earnings per share by $0.15 on a GAAP basis and $0.14 on a non-GAAP basis. The difference between the two measures shows the impact of the impairment on reported earnings, alongside the different calculation bases. Weak guidance was not limited to revenue: the company expects a non-GAAP gross margin of 40% to 43% in the fourth quarter. The range includes an expected impact of about two percentage points from reciprocal tariffs, the company said.
Enphase attributed pressure in its core U.S. residential market to higher interest rates and the expiration of the federal tax credit under Section 25D. Higher financing costs limit households' ability to acquire residential solar systems, while the credit's expiration removes one of the market's existing sources of support, in the company's description of the conditions it faces. These headwinds come as demand conditions vary across geographic markets, rather than improving in tandem. That leaves the fourth-quarter outlook tied to continued weakness in residential demand, alongside the impact of tariffs on margins. The company included that impact in the margin range it announced for the coming period.
As it diversifies its business, Enphase said it more than doubled the list of potential customers and partners for its IQ SST technology during the third quarter, to more than 50 organizations. It added that it is in discussions with a hyperscale cloud computing company and a global leader in AI computing as part of efforts to develop uses for the technology. The expanded list indicates a broader range of organizations with which the company is exploring potential opportunities, while not changing the current pressure on its residential solar business. Enphase is targeting customer trials of IQ SST technology in 2027. It expects commercial shipments to begin in 2028, according to the timeline it announced.