Enphase tumbles 10.6% after forecasting fourth-quarter revenue below analyst estimates
Key Facts
Enphase shares fell 10.6% on October 27 after the company reported third-quarter results and issued a fourth-quarter forecast below analyst estimates, according to Investing.com. The company projected revenue of between $225 million and $255 million in the final quarter of 2026, with a midpoint of $240 million, compared with analyst consensus of $300.5 million. The guidance also assumed a 10% decline in sell-through from the third quarter. The quarterly results themselves also fell short of revenue expectations, with the company reporting $293.3 million versus the expected $303.85 million. The market reaction therefore focused on weak guidance, alongside the annual revenue decline and demand pressures in its key markets.
Revenue was $293.3 million, down 29% from $410.4 million in the third quarter of 2025, according to Investing.com. It rose slightly from the second quarter of 2026, when revenue was $291.9 million, according to the company’s statement. Third-quarter revenue included $85.0 million from safe-harbor revenue, compared with $84.3 million in the previous quarter. Enphase reported net income of $23.4 million under generally accepted accounting principles (GAAP) and diluted earnings per share of $0.17. Non-GAAP net income was about $54.0 million, with diluted earnings per share on that measure of $0.41.
The company said the decline in the value of its investments reduced diluted earnings per share by $0.15 under GAAP and $0.14 on a non-GAAP basis. Net income did not prevent revenue from declining from the year-earlier period or falling short of analyst consensus. Non-GAAP gross margin also fell to 45.0% in the third quarter from 46.8% in the second quarter. The company attributed the margin decline to product mix and said reciprocal tariffs reduced it by about 1.3 percentage points, compared with an impact of about 2.0 points in the previous quarter. These indicators reflect pressure on demand and margins during the period, while the fourth-quarter forecast puts revenue below market estimates.
The company’s key markets delivered mixed results during the quarter. U.S. revenue rose about 3%, but the company said the increase was below expectations because of weak demand for residential solar. In Europe, revenue fell about 11%, affected by seasonality and weakness in some markets. Global sell-through rose about 1% quarter over quarter, short of the company’s expected growth of 10%. U.S. sell-through rose 5% from the previous quarter but remained down 35% year over year, while European sell-through fell 12% quarter over quarter, with notably weak demand in France.
Chief Executive Officer Badri Kothandaraman linked pressure in the U.S. residential solar market to higher interest rates and the expiration of the federal tax credit under Section 25D. He said, "Our core U.S. residential solar market continues to face headwinds from higher interest rates and the expiration of the federal tax credit under Section 25D." The company also provided liquidity and cash-flow figures, ending the quarter with $931.8 million in cash and marketable securities. Cash flow from operations was about $0.1 million, while capital expenditures were $11.5 million, compared with $14.4 million in the second quarter. The figures come as the company plans to ship more batteries in the fourth quarter within its revenue forecast range.
IQ battery shipments rose to 129.9 megawatt-hours in the third quarter from 113.8 megawatt-hours in the second quarter, according to the company. The number of certified battery installers worldwide increased to more than 26,000, compared with more than 25,000 in the previous period. For the fourth quarter, the company forecast battery shipments of between 100 and 120 megawatt-hours, along with about $51.2 million in safe-harbor revenue. It also projected non-GAAP gross margin of between 40% and 43%, including an impact from reciprocal tariffs of about two percentage points. On its future product pipeline, the company said customer and partner opportunities for its IQ SST product exceeded 50 after more than doubling during the quarter, and that it is targeting customer trials in 2027 and the start of commercial shipments in 2028.