Enphase Sells Manufacturing Credits Worth $100 Million for $92 Million
Key Facts
On October 28, 2026, Enphase Energy entered into a tax credit transfer agreement with an institution described in the disclosure as a leading institution, in a transaction involving advanced manufacturing credits worth up to $100 million. The credits result from manufacturing qualifying components in the United States and selling them to third parties during 2026 under Section 45X. The disclosure set the purchase price at no more than $92 million, payable in two installments during 2026 and 2027. Each installment is subject to customary conditions precedent, including the absence of a breach and the accuracy of the company's representations and warranties. Signing the agreement therefore does not mean Enphase will receive the full consideration immediately; the payments are spread over two years and are conditional on those provisions being satisfied.
The transaction follows a quarter in which the company recorded revenue of $293.3 million, compared with $291.9 million in the second quarter of 2026. But global sell-through, an indicator of sales to customers, rose only about 1% quarter over quarter, below Enphase's expected growth of 10%. The company said this performance contributed to revenue reaching the low end of its quarterly guidance range. The figures highlight a disparity between limited revenue growth and a wider shortfall from the growth the company had expected in end-market demand. In this context, the credit agreement provides for financial consideration payable in two installments, while the payment terms remain tied to the agreement's requirements.
Enphase had $931.8 million in cash and marketable securities at the end of the third quarter, while cash flow from operations was about $0.1 million during the quarter. The maximum purchase price for the credits is $92 million, compared with credits worth up to $100 million; that means the amount paid will not necessarily equal the credits' maximum face value. The final purchase price remains capped at the amount disclosed, and the agreement provides for two installments, with conditions precedent for each payment. The disclosure does not specify a particular use for the consideration, so the company does not link the transaction in this disclosure to funding a specific operation. The liquidity and cash flow figures provide a picture of the company's position at the end of the quarter preceding the agreement's announcement.
On profitability, non-GAAP gross margin was 45% in the third quarter, compared with 46.8% in the second quarter. Enphase attributed the decline to product mix and said tariffs reduced gross margin by about 1.3 percentage points. The CEO also said the company's core U.S. residential solar market is facing pressure from higher interest rates and the expiration of the federal tax credit under Section 25D. These pressures differ from the Section 45X manufacturing credits covered by the transfer agreement: the disclosure links the former to the residential solar market, while identifying the latter as credits generated by producing and selling qualifying components. After the third-quarter results were announced, the stock fell 10.6%, according to a report published by Investing.com on October 27, 2026.
The company had forecast fourth-quarter 2026 revenue of between $225 million and $255 million, including shipments of 100 to 120 megawatt-hours of IQ batteries. The forecast is based on an assumption that sell-through will decline 10% compared with the third quarter, and includes about $51.2 million in safe harbor revenue. Enphase set its non-GAAP gross margin range at between 40% and 43%, including an estimated tariff impact of about two percentage points. These projections represent the framework the company set for the next period after a quarter in which sell-through growth fell short of its expectations and gross margin was lower than in the second quarter. Battery shipments and revenue remain within the forecast ranges the company announced for the fourth quarter.
On the product front, Enphase said it remains on track to conduct customer trials of its IQ SSST inverter in 2027, with commercial shipments expected to begin in 2028. The timeline puts trials one year ahead of commercial shipments, according to the company's third-quarter results disclosure. These dates sit alongside the fourth-quarter outlook, which includes IQ battery shipments, but concern development of the new inverter. The company's announced indicators thus extend from fourth-quarter revenue and margin guidance to product development milestones in the following two years. The disclosure did not specify a more precise date for the trials or commercial shipments.