Enphase Reaches Higher End Of Q1/18 Sales Guidance

Enphase CFO Bert Garcia Quits As Company Inches Closer To Gross Margin Q4/2018 Target Of 30% With In Q1/2018 Gross Margin Reaching 26.2%
05:27 AM (Beijing Time) - 03. May 2018
enphase

Enphase achieved the higher end of its guidance in Q1/2018. For Q2/2018, it expects revenues in the range of $72 to $80 million.

Key Takeaways

  • In Q1/2018, Enphase revenues dropped 12% sequentially, but improved 28% YoY to $69.9 million, achieving higher end of guidance
  • Gross margin increased YoY to 26.2%, closer to the targeted 30% figure in Q4/2018
  • IQ 8 product is slated for a launch in Q4/2018, beginning with off-grid solutions in Q4/2018, followed by grid-agnostic solutions in 2019
  • Enphase CFO Bert Garcia has put in his papers after 8 years as CFO of Enphase to pursue other interests
  • He will continue to hold the fort till June 2018, and let the management find a replacement externally

US based solar microinverter supplier Enphase Energy Inc., announced its Q1/2018 financial results along with the resignation of its CFO Bert Garcia. Garcia is leaving the company after working eight years. No specific reason was shared for his departure except that he is leaving to pursue other opportunities.

Incidentally during the Q2/2017 call with analysts, Enphase’s previous President and CEO Paul Nahi announced his departure with immediate effect. He was replaced by the company’s COO Badri Kothandaraman (see Enphase Finds Replacement For Paul Nahi).

Garcia will stay on until June 30, 2018, when Enphase plans to have hired  an external candidate as a replacement. This leaves Kothandaraman at the helm of affairs to steer the company towards the Q4/2018 goal of achieving Enphase’s 30-20-10 operating model target – 30% gross margin, 20% operating expenses and 10% operating income.

Q1/2018 financials – GM up

After having returned to profitability in Q4/2017, Enphase achieved higher end of its revenue guidance in Q1/2018 with $69.9 million. Even though this is a drop of 12% sequentially from $79.7 million, revenues increased 28% YoY. Gross margin was 26.2% up from 23.8% YoY due to pricing management, supply chain optimization and IQ platform transition.

Net loss in Q1/2018 was $5.12 million, increasing from $2.94 million in the last quarter, but a big step down from $23.3 million in Q1/2017.

During the reporting quarter, it shipped 611,000 microinverter units equal to 180 MW DC. It started shipments of its IQ 7 products to its US customers. Recently, it began shipping this product to its UK customers as well. A strategic deal was struck with Panasonic to pair Enphase’s IQ 7X microinverter with Panasonic’s N Series modules for the North American residential market (see Enphase And Panasonic Partner Up).

In Q4/2018, Enphase plans to launch the IQ 8 product line, which will be introduced in a phased manner, beginning with off-grid solutions in Q4/2018, followed by grid-agnostic solutions in 2019.

“We note that the IQ8 is an even more disruptive product from a margin perspective compared to the IQ7 given the potential for further cost reductions. We see above 30% GM as likely in 2019 as IQ8 plays out,” said research analysts Jeffrey Osborne of Cowen & Company.

Summarizing the quarter results, Osborne stated, “Stable pricing, supply chain optimization, and the IQ7 platform transition all contributed to the solid quarterly results. The IQ7 product cycle is already playing out well in the US, with management targeting an international launch in 2Q18.”

Guidance

For Q2/2018, Enphase is expecting revenues to be in the range of $72 million to $80 million. GAAP and non-GAAP margin is guided to be between 26% to 29%. GAAP operating expense will be in the range of $19.5 million to $20.5 million. This would include around $2 million of stock-based compensation expense.

 

Anu Bhambhani

Anu Bhambhani is the News Editor of TaiyangNews

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Anu Bhambhani