Enphase Energy (NASDAQ:ENPH) reported third-quarter 2026 revenue of $293.3 million, including $85 million of safe-harbor revenue, as residential solar demand remained pressured by higher interest rates and the expiration of the 25D tax credit.
The company shipped 1.42 million microinverters, or approximately 655.2 MW DC, and 129.9 MWh of IQ Batteries during the quarter ended Sept. 30. Enphase said global revenue and sell-through each increased about 1% sequentially, below its earlier expectation for roughly 10% sell-through growth.
“We are not seeing any meaningful recovery in the U.S. demand,” President and Chief Executive Officer Badri Kothandaraman said. The company expects global sell-through to decline about 10% sequentially in the fourth quarter, to approximately $210 million.
Third-Quarter Results and Fourth-Quarter Outlook
On a GAAP basis, Enphase reported gross margin of 43.3%, operating income of $6.5 million and net income of $23.4 million, or $0.17 per diluted share. Non-GAAP gross margin was 45%, while non-GAAP net income was $54 million, or $0.41 per diluted share.
Third-quarter GAAP earnings included a $26.5 million impairment in investments, which reduced GAAP and non-GAAP diluted earnings per share by $0.15 and $0.14, respectively, net of tax.
Chief Financial Officer Mandy Yang said non-GAAP gross margin declined from 46.8% in the prior quarter primarily because of product mix. GAAP gross margin in the second quarter had benefited from a 15.6-percentage-point impact from IEEPA tariff refunds, while reciprocal tariffs reduced third-quarter gross margin by 1.3 percentage points.
Enphase ended the quarter with $931.8 million in cash, cash equivalents and marketable securities, down from $937.7 million at the end of the second quarter. Free cash flow was negative $11.4 million, which Yang attributed primarily to working-capital changes, including the timing of safe-harbor revenue prepayments and production tax credit monetization.
For the fourth quarter, Enphase forecast revenue of $225 million to $255 million, including approximately $51.2 million of safe-harbor revenue and battery shipments of 100 MWh to 120 MWh. It expects GAAP gross margin of 38% to 41% and non-GAAP gross margin of 40% to 43%, with both ranges including about two percentage points of reciprocal tariff impact.
The lower margin outlook reflects product mix, battery price adjustments and increased freight costs associated with new-product production, Yang said.
U.S. and International Demand Trends
Revenue from the United States rose about 3% sequentially and represented 80% of Enphase’s third-quarter revenue. U.S. sell-through increased 5% from the second quarter but fell 35% from a year earlier, which the company said was consistent with third-party reports showing a similar decline in U.S. residential solar permits.
Enphase said it believes it maintained market share amid the decline, citing balanced exposure across distribution channels and third-party ownership offerings. U.S. commercial sell-through increased about 50% sequentially as IQ9 commercial microinverter sales ramped.
International revenue, which accounted for 20% of total revenue, declined 11% sequentially. European sell-through fell approximately 12%, which management attributed partly to summer seasonality and softer demand, particularly in France.
Storage represented about 50% of European revenue in the quarter. Battery activations in the Netherlands increased 23% sequentially, following 102% growth in the second quarter from the first quarter. In France, battery activations fell 12% and microinverter activations declined 24% from the second quarter. German activations decreased 5%.
Battery, Commercial and EV Plans
Kothandaraman outlined several growth initiatives for 2027 and beyond, beginning with the planned rollout of the fifth-generation IQ Battery, or G5. The company expects pilots in the fourth quarter and volume shipments in the first quarter of 2027.
The stackable AC-coupled product is designed to scale to 30 kWh in a single stack. Enphase expects residential battery shipments of approximately 450 MWh in 2026 and said it believes the business can grow about 50% in 2027. Management identified the Netherlands, France, Australia and retrofit opportunities among Enphase’s existing U.S. solar customers as potential growth areas.
The company also pointed to its Propel prepaid lease offering, developed with SolSource Solutions, TriBeam Financial and Greentech Renewables, as a potential driver for U.S. residential solar and battery sales. Propel is available in 13 states, with installer participation rising to approximately 350 from 290 in the second quarter. Weekly originations exceeded 300, compared with about 200 in the second quarter, according to Enphase.
Enphase expects commercial revenue of roughly $30 million in 2026 and said it could exceed $100 million in 2027. It plans pilot deployments of its IQ Battery C80 commercial storage system in the first quarter of 2027 and volume shipments in the second quarter. The company expects to sell approximately 100 MWh of commercial batteries in 2027.
In EV charging, Enphase expects to begin pilots of its bidirectional charging products during the current quarter and volume shipments in the first quarter of 2027. The company said it is working with three global automotive original equipment manufacturers in the U.S., as well as one European OEM. Management projected a $15 million to $20 million revenue opportunity from bidirectional charging in 2027.
Data Center Power Initiative
Enphase also highlighted its IQ Solid-State Transformer, a power-conversion system intended for AI data centers. The company said it successfully demonstrated conversion from 13.8 kV AC to 800 VDC at its Austin laboratory and expects to demonstrate 34.5 kV capability in the fourth quarter.
The company is preparing megawatt-scale system demonstrations and said its pipeline has expanded to more than 50 potential customers. Enphase expects customer pilots in the second half of 2027 after compliance work and initial commercial shipments around late 2027 or early 2028. Management said the business could potentially become a $1 billion annual revenue opportunity by 2030, though it emphasized that substantial engineering, qualification and execution work remains.
About Enphase Energy (NASDAQ:ENPH)
Enphase Energy, Inc develops and manufactures technology for residential and commercial solar energy systems. Its products include solar microinverters, which convert electricity generated by individual solar panels into usable power, along with integrated energy management technologies designed to improve system performance, monitoring and reliability.
The company also offers battery storage systems, electric vehicle chargers and software that enables customers, installers and utilities to monitor and manage distributed energy resources.
