Enphase Energy Forecasts Lower Q2 Sales but Predicts US Solar Market Recovery in 2024

Enphase Energy, a leading solar energy technology company, reported lower-than-expected earnings and revenue for the first quarter of 2024. The company's revenue of $263.3 million fell short of analyst expectations, and it reported a GAAP net loss of $16.1 million, deviating from the anticipated net income of $57.56 million.

Enphase's Q1 revenue declined by nearly two-thirds year-over-year, driven by a 34% drop in U.S. revenues, while Europe revenue increased 70% sequentially. The company attributed the revenue decline to seasonality and a further softening in U.S. demand, as well as efforts to manage channel inventory.

For the second quarter of 2024, Enphase provided a downbeat outlook, forecasting revenues between $290 million and $330 million, well below the $347 million Street view. This guidance also falls significantly lower than the $711 million reported in Q2 2022.

Why this matters: Enphase Energy's financial performance is often seen as a bellwether for the broader solar industry, and investors have been closely monitoring the company for signs of recovery in the U.S. residential solar market. The weaker-than-expected results and guidance highlight the ongoing challenges faced by solar equipment manufacturers, including elevated inventory levels, regulatory changes, and high interest rates.

Despite the current challenges, Enphase Energy remains optimistic about the long-term growth potential of the U.S. rooftop solar market. The company predicts a recovery in 2024, driven by factors such as increased adoption of renewable energy and supportive government policies. Enphase has been actively expanding its product offerings, including the launch of new microinverters and batteries, and has announced strategic partnerships to enhance the accessibility and efficiency of solar energy solutions.

Enphase Energy CEO Badri Kothandaraman stated, "We expect the U.S. residential solar market to recover in 2024 as we continue to introduce new products, expand our partnerships, and focus on delivering superior customer experience." The company plans to resume higher shipment levels in the second half of 2024 and expects to have a global capacity of 7.25 million microinverters per quarter, with 5 million in the U.S.

Key Takeaways

• Enphase Energy reported lower-than-expected Q1 2024 earnings and revenue.
• Q1 revenue declined 66% YoY due to 34% drop in U.S. sales, despite 70% Europe growth.
• Enphase provided a weak Q2 2024 revenue outlook of $290-$330M, below $347M consensus.
• Enphase's performance seen as a bellwether for the broader solar industry.
• Enphase expects U.S. residential solar market to recover in 2024 with new products and partnerships.