US Market Pulls Down Enphase’s Q2/2023 Revenues

• Enphase Energy's Q2/2023 revenues declined with drop in demand in the US market thanks to high interest rates  
• International business, led by Europe and Australia, fared better with greater push for home electrification and self-consumption in these markets  
• It shipped around 5.2 million microinverters and 82.3 MWh of batteries in the reporting quarter 

Microinverter manufacturer Enphase Energy said its Q2/2023 business suffered a decline in the US, blaming high interest rates and lower utility rates here for the 'broad-based slowdown', but said its international business reported a record quarter especially in Europe and Australia.  

Its $711.1 million revenues in the US market declined 12% sequentially and 1% annually with the overall sell-through up only 2% since last quarter, and also last year, which was mainly due to high backlog of NEM 2.0 installations. These are expected to last through the summer. In H1/2023, the US sell-through was reported to be around 20% less than Q4/2022 with high interest rates.  

In comparison, Europe brought in 25% more revenues with a 13% sequential increase in sell-through. Even Australia pitched in with double revenues since last year. Enphase will be betting on the push for home electrification in Europe, especially in countries like Germany and Austria, and also pitch its products for target audience seeking self-consumption.  

Overall, the US and international revenue mix was 59% and 41%, respectively.   

Enphase CEO Badri Kothandaraman said the company is taking 'aggressive and prudent' actions in the US to manage its channel inventory.  

"We are managing through a correction in the US solar market after three years of phenomenal growth, a period in which the residential solar market doubled, and Enphase sales tripled. Even so, residential solar has only achieved 4% to 5% penetration in the US," said Kothandaraman.   

Going forward, Enphase sees 30% investment tax credit (ITC), rising utility rates, increased grid stability, climate change and increasing electric vehicles (EV) adoption as positive long-term drivers for the US market.  

For Q2/2023, GAAP gross margin improved to 45.5% from 45.0% in Q1/2023 and 41.3% in Q2/2022, while operating income rose around 1.6% QoQ and 81% YoY to $170.3 million in the reporting quarter.  

During the reporting quarter, Enphase shipped around 5.2 million microinverters and 82.3 MWh of batteries. This includes 50,000 microinverters shipped within the US from its contract manufacturers Foxconn in Wisconsin and Flex in South Carolina (see New Solar Inverter Production Launched In US).  

Its IQ8 microinverters are now being shipped to various European markets to be followed by shipments to Sweden, Denmark, Greece, the UK and Italy later this year. The company is on track to release another variant IQ8P microinverter variant into production within 2023.  

Guidance 

The forecast for Q3/2023 is quite subdued with revenues in the range of $550 million to $600 million, including shipments of 80 MWh to 100 MWh of IQ batteries. GAAP gross margin is guided in the 41% to 44% range, excluding any Inflation Reduction Act (IRA) benefits. It expects $14.5 million to $16.5 million IRA benefits on estimated shipments of 600,000 units of US manufactured microinverters.  

Recently, US residential installer SunPower Corporation also cited macroeconomic uncertainty and higher interest rates in the market to pull down its annual guidance for 2023. It will also introduce cost-cutting measures to deal with challenges due to weakening demand (see SunPower's Business Suffers With Dip In Demand).