Enphase’s first quarter saw a marked negative market reaction as the company missed Wall Street’s expectations for both revenue and profitability, with management attributing the performance to several headwinds. CEO Badri Kothandaraman pointed to elevated channel inventory and softer demand in the U.S. residential solar market, further strained by high interest rates and the financial distress of a major leasing partner. While international sales, especially in Europe, grew on new product introductions, overall sell-through was below typical seasonal patterns. Management noted, “The US solar market remains under pressure from high interest rates and many installers, lease providers and distributors are navigating through a tough environment.”
Is now the time to buy ENPH? Find out in our full research report (it’s free).
Enphase (ENPH) Q1 CY2025 Highlights:
- Revenue: $356.1 million vs analyst estimates of $362 million (35.2% year-on-year growth, 1.6% miss)
- Adjusted EPS: $0.68 vs analyst expectations of $0.72 (5.9% miss)
- Adjusted EBITDA: $76.69 million vs analyst estimates of $115.1 million (21.5% margin, 33.4% miss)
- Revenue Guidance for Q2 CY2025 is $360 million at the midpoint, below analyst estimates of $375 million
- Operating Margin: -1.7%, up from -16.3% in the same quarter last year
- Sales Volumes rose 10.7% year on year (-71.4% in the same quarter last year)
- Market Capitalization: $6.03 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Enphase’s Q1 Earnings Call
- Praneeth Satish (Wells Fargo) probed whether Enphase would pass tariff costs to customers or absorb them. CEO Badri Kothandaraman explained most costs would be absorbed temporarily, with supply chain changes expected to resolve the issue in a few quarters.
- Phil Shen (ROTH Capital Partners) asked about the expected revenue cadence for the year. Kothandaraman refused to provide multi-quarter guidance but highlighted new product launches as potential drivers for growth in the second half.
- Brian Lee (Goldman Sachs) questioned battery shipment volumes given tariff impacts and pricing. Kothandaraman emphasized reduced system costs from new battery integration, expecting continued growth despite near-term margin pressures.
- Mark Strouse (JPMorgan) sought clarification on supply chain adjustments for the 10C battery and the impact on rollout timing. Kothandaraman confirmed plans to quickly align supply chains for domestic content and minimal rollout delays.
- Andrew Percoco (Morgan Stanley) asked how Enphase expects to secure affordable non-China battery cell supply. Kothandaraman described working with two new suppliers and stated the transition’s success is critical to restoring margins by mid-2026.
Catalysts in Upcoming Quarters
In coming quarters, the StockStory team will be monitoring (1) the pace and effectiveness of Enphase’s supply chain diversification away from China for battery cells, (2) the commercial adoption and cost impact of the fourth-generation IQ Battery and IQ9 microinverter, and (3) the evolution of U.S. energy policy and tariff enforcement. Execution on new product launches and progress toward normalizing channel inventory will also be important markers of operational discipline.
Enphase currently trades at $36.51, down from $53.50 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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