Enphase Energy (Enphase) CEO Paul Nahi said the company has enjoyed “strong demand” for its solar energy systems in the US, Australia and Europe, resulting in record shipments of 195MW for the second quarter of this year.
The module-level power electronics and energy management company, headquartered in California, released its Q2 results, for the period ending 30 June, yesterday. Shipments of its microinverter systems were up 48% year-on-year, with a record 195MW of AC microinverter systems shipped during the quarter, while revenues were at US$102.1 million, again representing an increase, this time of 25% year-on-year. The company also made a non-GAAP margin of 32.7% and non-GAAP diluted earnings of US$0.06 per share. Over the second quarter, GAAP net loss was an improved US$0.6 million, as opposed to US$3.0 million in Q2 2014, equating to US$0.01 per share versus US$0.07 per share.
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In an earnings call to explain results, CEO Nahi said the company’s “core US residential markets” as well as Europe and Australia had seen strong demand, while also talking up the future potential of a supply and partnership agreement with residential installer Sunrun – which is soon to launch a US$390 million IPO – in the US made during the quarter. Indeed, within that core domestic market, Nahi pointed out, Enphase has “strategic partnerships with four out of the five top installers, NRG, Sunrun, SunEdison and Vivint”, with only SolarCity conspicuous by its absence from that top-five list.
However, the company did say it expected overall growth into the third quarter to be a little less buoyant, guiding expected revenues to be in the range of US$100 million to US$105 million, which represents an increase year-on-year from Q3 2014 of 1-6%.
Vivint supplier base impact
The only apparent grey cloud for Enphase was a recent decision by Vivint to broaden its supplier base, which had a dampening effect on overall performance, chief financial officer Kris Sennesael said in the call. Vivint has adopted a multi-sourcing strategy for inverters, ending Enphase’s solar supplier status with the installer. Enphase earned around 40% less revenue from Vivint as it did year-on-year but Sennesael said that in contrast, revenues not including Vivint had gone up by 50%. Sennesael said Vivint, historically Enphase’s largest single customer, had fallen from constituting 30% of Enphase’s total revenue in Q2 of 2014 to 14% in the quarter just ended. As Paul Nahi pointed out, Vivint’s own revenues were down 75% in the quarter year-over-year which had a further impact.
Chief financial officer Kris Sennesael also said in the call that historically, it had been typical for Enphase results to be stronger in the fourth quarter of the year as opposed to the third. He said, in response to an analyst during the Q&A session which followed the call that he would not guide further ahead than Q3, but that, partly “based on the information that we have today”, he expected the trend to continue of Q4 being “up slightly, flat to slightly up versus the third quarter”.
Nahi claimed that the company expects Enphase’s share of Vivint’s business to “normalise” during the third quarter, while acknowledging increased competitiveness in the inverter market.
“Enphase has an exceptional track record of cost reduction and we will continue to reduce costs even further. In fact our current cost reduction roadmap is more aggressive than ever,” Nahi said.
In response to a request from analysis firm Deutsche Bank to give more explanation on cost reduction status and strategies, Nahi said that the company will be “providing a lot more details about that in the coming months at a high level”.
Nahi was upbeat on the Vivint situation however. SunEdison has signed a definitive agreement to buy out Vivint for around US$2.2 billion in a deal expected to close by the end of this year. Nahi said SunEdison and Enphase’s “long standing relationship” would give the microinverter maker a good platform from which to support SunEdison/Vivint.
“…We are very optimistic about the relationship going forward with the joint company,” Nahi said.
General prospects
Nahi also appeared to be optimistic about the prospects of microinverters in general for taking a greater share of the total world PV market in future and prospects for the company’s forthcoming AC battery and energy management systems, as well as talking up successes so far and opportunities ahead in Australia and New Zealand. In a recent interview with PV Tech's sister site PV Tech Storage, Nahi had asserted his view of the potential for combined solar-plus-storage solutions in many markets, including Australia.
Internationally, the company made a second quarter revenue increase year-on-year of “nearly 200%” in Australia and New Zealand, while overall revenue in non-US markets was up 37%. Asked about expansion plans in the Asia Pacific region, Nahi refused to be drawn, but hinted that a territory or multiple territories “further north” in the region were of interest.
Additionally, during a Q&A session with analysts following the call, the Enphase representatives were asked if they felt recently policy shifts in the United Kingdom would have an effect on activities in that market. Nahi said that as a relatively new entrant, “there is a lot of market share ahead of us” and said the company did not see it “significantly impacting our business”.
Similarly, Nahi said he was not concerned by the impending end of the US ITC support mechanism over the next two years, claiming that he believed it would drive on further competitiveness.
Enphase Energy quarterly earnings call transcribed by Seeking Alpha.
