Leading PV microinverter supplier Enphase Energy reported lower than expected revenue for the third quarter of 2018, citing continued critical component shortages for the flat sales and shipments.
Enphase said that component supply shortages (high-voltage transistors) had constrained quarterly revenue by more than US$10 million in the quarter and was technically sold out in the fourth quarter of 2018.
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Badri Kothandaraman, President and Chief Executive Officer of Enphase Energy, said in the earnings call, “The customers continue to appreciate our differentiated products, quality, and service initiatives. Our strong balance sheet was instrumental in driving increased customer demand. Our biggest challenge in Q3 was meeting this additional demand. We experienced supply shortages that constrained our revenue by more than $10 million. For Q4, we are seeing strong demand and are fully booked already. We expect to be supply constrained in Q4 as well”.
The company is also assembling its latest IQ 7 microinverter at a new production line in Mexico, via its OEM partner Flex, which is expected to start in the second quarter of Q2 2019.
This is to both avoid the US Section 301 tariffs on a wide range of goods made in China and also to better serve its module manufacturing customers such as JinkoSolar and LG Electronics a key new client SunPower as AC modules should ramp in the same timeframe that helps reduce cycle times and streamline its inventory control.
Enphase shipped a total of 204MW (DC), or approximately 665,000 microinverters in the third quarter of 2018, compared to 203MW (DC), or 675,000 microinverters in the second quarter of 2018.
Financials
Enphase reported third quarter revenue of US$78.0 million, including a US$3.3 million milestone achievement from a partner on its next-gen IQ 8 technology for use by an overseas customer that remains undisclosed.
GAAP gross margin in the quarter was 32.4%, compared to 29.9% in the previous quarter.
The company expects revenue in the fourth quarter of 2018 to be in the range of US$80.0 million to US$90.0 million with a GAAP gross margin to be within a range of 31% to 34%.
Management noted that the component shortages would ease early next year due to new supplier partnerships. Enphase is now the exclusive module level power electronics (MLPE) supplier for SunPower’s residential business in the US and expects volume shipments of IQ 7XS microinverters in the fourth quarter of 2018 and an acceleration of the ramp throughout 2019, which is expected to improve revenue projections in 2019.