Enphase Sees Revenue of $225 Million to $255 Million as Sell-Through Rate Falls 10%
Key Facts
Enphase Energy reported revenue of $293.3 million for the third quarter of 2026 on October 27, slightly above $291.9 million in the prior quarter, but issued fourth-quarter guidance of $225 million to $255 million. The company said the range includes $51.2 million in safe-harbor revenue and assumes a 10% decline in the sell-through rate from the third quarter. Oppenheimer estimated analyst consensus revenue at $297 million and put its gross margin forecast at 45.7%, above the company’s range of 40% to 43%. Enphase also expected to ship 100 to 120 megawatt-hours of batteries in the fourth quarter. The weaker guidance points to an expected sequential revenue decline, as management said it is cutting shipments to address inventory in distribution channels.
Diluted earnings per share were $0.17 under U.S. generally accepted accounting principles and $0.41 on an adjusted basis, while adjusted net income fell to $54.0 million from $117.3 million a year earlier. Third-quarter shipments included 1.42 million microinverter units with total capacity of 655.2 megawatts DC. Battery shipments were 129.9 megawatt-hours, versus 113.8 megawatt-hours in the second quarter. The company said safe-harbor revenue was $85.0 million, compared with $84.3 million in the prior quarter. For the nine months ended September 30, revenue declined to $868.083 million from $1,129.664 million in the same period of 2025.
Sell-through weakness remained more pronounced in the United States year over year, despite improving from the prior quarter. The global distributor and installer sell-through rate to end customers rose 1% sequentially, below the company’s expected growth of 10%. The U.S. sell-through rate increased 5% from the second quarter but remained 35% below its level a year earlier. In Europe, the rate fell 12% sequentially; regional revenue also declined about 11%, while U.S. revenue rose about 3% during the quarter. Chief Executive Officer Badri Kothandaraman said the core U.S. residential solar market is facing pressure from higher interest rates and the expiration of the federal tax credit under Section 25D.
Adjusted gross margin was 45.0% in the third quarter, compared with 46.8% in the second quarter, with the company attributing the decline to product mix. It said reciprocal tariffs reduced gross margin by about 1.3 percentage points, compared with about 2.0 points in the prior quarter. The company forecast adjusted gross margin of 40% to 43% in the fourth quarter, including an estimated tariff impact of about two percentage points. It put expected adjusted operating expenses at $76 million to $80 million. On liquidity, the company ended the quarter with $931.8 million in cash, cash equivalents and marketable securities, while operating cash flow was about $0.1 million.
Management said it plans to ship about $20 million less in products than the sell-through rate in the fourth quarter, in preparation for a seasonally weak first quarter of 2027. The reduction is intended to trim channel inventory ahead of the weaker seasonal period. In the market, the stock closed at $29.76 on October 27, after closing at $30.36 in the previous session. JPMorgan cut its price target to $29 from $35 and maintained its “Neutral” rating, according to an Investing.com report. Oppenheimer also downgraded the stock to Perform from Outperform and removed its price target, citing a core business recovery that is not materializing as expected.
In a parallel effort to diversify its business, Enphase announced that it had successfully demonstrated its IQ SST technology for converting 13.8 kilovolts AC to 800 volts DC at its laboratory in Austin. The company said its pipeline of potential customers and partners for the technology had surpassed 50 after more than doubling in the third quarter. It added that it is working on solutions for the needs of a cloud computing leader and a global leader in AI computing. The company aims to validate operation at 34.5 kilovolts and demonstrate a megawatt-scale system by the end of 2026. Its plan calls for customer trials in 2027, followed by initial commercial shipments in 2028; it also estimated that the technology business in the data center market alone could generate annual revenue of $1 billion by 2030.