Enphase Energy will lay off close to 160 of its global workforce, as it adjusts to the drop in residential demand following the elimination of credits under Section 25D
The company is shifting its focus to profitability and tightening spending, moving certain functions to cost-efficient regions
Lower safe harbor and storage revenue in the US and softening of demand in Europe impacted its Q4 2025 revenue negatively
Enphase Energy, the US-based microinverter and storage solutions provider, has announced plans to lay off nearly 6% of its global workforce as it adjusts its business strategy, in the wake of reduced residential demand in the country, to achieve profitable growth.
It cites the early phase-out of the 30% Section 25D Residential Clean Energy Tax Credit on December 31, 2025, as the driver behind the lack of demand (see OBBBA Could Cut US Residential Solar Capacity By 46% By 2030).
In a letter to employees, as shared in a Securities and Exchange Commission (SEC) filing, Enphase President and CEO Badri Kothandaraman wrote, “In 2025, a U.S. policy changed in a meaningful way; the federal 30% Residential Clean Energy Tax Credit (also known as the 25D tax credit) ended on December 31, 2025. As a result, beginning in 2026, homeowners purchasing systems with cash or a loan no longer receive that credit, which reduces near-term demand and increases the importance of financing and customer value.”
He added, “To align with our updated 2026 outlook, we are taking targeted steps: simplifying parts of the organization; making a modest reduction in teams, globally; tightening spending; and focusing investment on the priorities that matter most.” This decision is expected to affect around 160 Enphase employees who will be let go by February 16, 2026.
As part of its strategy going forward, Enphase will move certain functions to cost-efficient regions. Select smaller markets, such as Brazil, the Philippines, and South Africa, will be transitioned to a ‘distribution-led coverage model’. It plans to limit R&D investment in early-stage adjacent initiatives, including portable energy systems and balcony solar. Non-essential spending will be reduced while AI-enabled capabilities will be expanded.
Financial Results
Enphase increased its Fiscal Year 2025 (FY2025) GAAP revenue from $1.33 billion in the previous year to $1.47 billion, with a gross margin of 46.6% (2024: 47.3%) and net income of $172 million (2024: $102.6 million).
Nevertheless, it reported a decline of over 16% sequentially and 10% year-on-year (YoY) in its Q4 2025 revenue of $343.3 million. Its US revenue declined by nearly 13% compared to Q3, driven by lower safe harbor and storage revenue. The company also cited softening demand in Europe, which negatively impacted its quarterly revenues by around 29%.
However, it reported the company’s highest sell-through demand in the US in more than 2 years, up 21% quarter-over-quarter (QoQ), driven by demand for solar and battery installations ahead of Section 25D expiration. This also reduced its channel inventory to healthy levels, management shared.
Enphase’s quarterly shipments from its US fabs totaled approximately 1.31 million microinverters and 51.1 MWh of IQ Batteries, supporting domestic content requirements. These were booked for 45X production tax credits (PTC). Shipments of IQ Batteries during the reporting quarter totaled 150.1 MWh, having declined from 195.0 MWh in the previous quarter. Its total certified installer base worldwide rose to over 22,000.
During Q4, Enphase launched commercial shipments of its US-made, Foreign Entity of Concern (FEOC)-compliant Q9N-3P commercial microinverter and IQ EV Charger 2 across the country. The microinverter is the company’s maiden GaN-based microinverter for 3-phase 480Y/277 V (wye) grids.
In Q1 2026, Enphase targets between $270 million and $300 million in revenue, along with a GAAP gross margin of 40.0% to 43.0%, which includes approximately 5 percentage points (pp) of reciprocal tariff impact. GAAP operating expenses are guided within a range of $137 million and $141 million.
Analysts at Roth expect storage retrofits in the Netherlands, recovery in the US commercial & industrial and reversing Section 25D loss via prepaid products as the 3 possible opportunities to help Enphase in 2026. Lower interest rates and higher utility prices may act as factors supporting this recovery. However, low-cost Chinese batteries could limit its battery adoption in the Netherlands, while limited progress in the US C&I and California residential markets could pose risks.