Enphase revenues rise but shipments dip as supply chain constraints persist

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An Enphase microinverter being installed. Image: Enphase Energy.

Enphase Energy shipped fewer microinverters in Q2 2021 than in the preceding quarter as supply constraints continued to bite, but the manufacturer still managed to boost revenue sequentially.

Enphase shipped 2,362,401 units in Q2 2021, equivalent to about 796MWdc, down roughly 4% on the 830MWdc it shipped in the prior quarter. But the company reported a 4.7% rise in quarterly revenues, reaching towards the top end of its guidance at US$316.1 million.

The company’s non-GAAP margin also rose marginally to 40.8%.

With US residential solar originations soaring year-on-year, and global shortages of semiconductor chips dampening manufacturing output, demand continues to be “well ahead” of supply, Enphase said. In Q2 Enphase derived 81% of its revenue from the US, a figure which would have been higher were it not for supply chain constraints. This resulted in just a 3% sequential uplift in revenue from the region, however European revenues were up 16% sequentially, lifting the region to a new record.

In the second quarter Enphase was beset by supply constraints related to the AC FET drivers used in its flagship microinverter products. Enphase had two suppliers of these drivers through most of the second quarter but added a third towards the end of the period, with a fourth expected to be added in Q3 2021.

These additions, chief executive Badri Kothandaraman said, would ease supply constraints throughout the second half of the year. While supply disruptions are expected to continue into Q3, by Q4 Kothandaraman said he was “cautiously optimistic” that supply would be “significantly better”.

Indeed, in an analyst call Kothandaraman said he expected the inverter manufacturer to exit Q4 2021 with the capacity to manufacture 5 million inverter units per quarter, bolstered by additions to its manufacturing line in Mexico and India.

Supply constraints are, however, having a further impact on the rollout of its next generation of microinverters, the IQ8. Shipments of the IQ8, aimed at residential installations, and the IQ8D, which is targeted at C&I customers, are to commence in Q3 and Q4 respectively, however the company said it would now be ramping manufacture of these products more cautiously owing to supply concerns.

With supply chain concerns beginning to ease, albeit later in the year than Enphase initially expected, revenue is expected to grow as the year progresses and Enphase is forecasting for Q3 2021 revenue to fall in the US$335 – 355 million range.

Enphase was bolstered by incremental growth from its domestic energy storage product, which shipped 43MWh in Q2 2021. Launched in July last year, Enphase has forecasted for 60 – 70MWh of shipments in Q3 2021 and the company wants to take its manufacturing capacity to 120MWh per quarter. The manufacturer is currently stymied in energy storage by long product lead times, currently between 12 – 14 weeks. Kothandaraman told analysts it was Enphase’s intent to reduce this to below 10 weeks by the end of the year by making improvements to both the engineering process and in logistics too.

Enphase’s storage proposition was also boosted by the company’s first move into grid services offerings. Customers in Connecticut, Massachusetts and Rhode Island can now earn up to US$1,500 per year by allowing utilities to access their capacity through Enphase’s ConnectedSolutions programme.

Revenue was also aided by above-expectations contributions from two recent acquisitions – system design software providers Sofdesk and Noida which Enphase said were now fully integrated into the business, with new products set to be released “as soon as possible”.

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