ENPH - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen. And welcome to Enphase Energy's First Quarter 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instructions will follow at that time [Operator Instructions]. And as a reminder, this conference call may be recorded. to conference like to now would turn over the Ms. I Carrabino. Christina may Ma'am, you begin.

Christina Carrabino

thank us Garcia, Officer; ended results. results for the call afternoon. President you Belur, for Good first quarter and Bert XX, Chief the XXXX. And Officer; Executive After announcing joining Officer. Chief are Kothandaraman, Enphase first press and Chief today, call closed to Energy's release Financial on March quarter today's market XXXX On Badri Enphase's discuss conference Enphase Raghu Product issued a its today's

forward-looking significant call, performance, During statements not the including of its uncertainties, related this results risks the Energy's actual products, future expectations. to, demands market course of Enphase from timing conference management limited and Enphase and financial trends. will make advantages current statements, of its to involve for and and Energy's and technology could Enphase market these differ events but materially statements These forward-looking

which or For annual and a ended XXXX, more complete of ended financial the to Web cautions replace file filed Company section also see will financial charges. XXXX, can of XX, the which Relations has to on today, expressed on SEC have result please are obligation reliance on on the Enphase that and with undue its be unless or been in any undertakes quarterly Also, Form its is earnings on provided changes with in as The December call GAAP report XX-K report for note non-GAAP which the and statements XX-Q year XX, the on risks duty events for noted, certain please release basis you a used its in measures exclude forward-looking and uncertainties, quarter Investor SEC of found adjusted second new the no these a posted XXXX. Form the any future March information, discussion non-GAAP of otherwise to quarter update be financial Energy not the of statements, reconciliations measures in site. measures the expectations. to Company's forward-looking this

Now President Officer Kothandaraman, Badri? Badri Executive to I'd and Energy. Enphase of like introduce Chief

Badri Kothandaraman

today quarter financial And had reported first of thanks revenue at us of decent joining $XX the of our XXXX quarter. afternoon. a the results. first end for XXXX to discuss of higher We million for guidance. quarter Good We

Our non-GAAP of quarter the in gross margin end XX.X%, first surpassing higher was the guidance.

Our $XXX,XXX. income non-GAAP was operating

non-GAAP second in come a of quarter past year positive the consecutive to and We operating long report have way income. the are pleased

top fortifying stated I several is balance before, by As improving foundation build times solid the operations my have to and priority a sheet. at Enphase financial

these optimization quarter, transition. During the make with IQ pricing further management, gross through and progress fronts improvement we margin supply continued to chain first on

We XX-XX-XX are our progress by model operating of the target making on good quarter fourth reaching XXXX.

the of exited We announced sheet. cash quarter Now which million investment. the first turning to balance previously a $XX.X a million, $XX equity included private with balance

approximately helped $X.X the inventory on detail into of free will go conversion financial QX, in million the cash call. in AR, focus sharpened in Our cycle later Bert and management our positive resulting flow. results improving cash AP about improve greater

to based colleague. NPS a by is as popular calculated friend called is are recommend One has perceived doing on NPS, by year, and past ease business, Promoter all the customer transformed we culture called one such and by aspects way Net applied continues are customers. surveys or on supported is Score, to Enphase likely across the to discipline of from feedback of This also how a of broadly example its Over This to rigor they measured be metrics. metric business. focus our Enphase

benchmark provide industry. for a team a support involved executive In very we seasoned is executive January, ensuring we customer lead a the to team. is customer our solar that with Our best-in-class hired experience

in percentile, the significant our resulting a in that times wait based center, over XXth not upon have past call average. measure two We optimized improvement wait months. times We

effort not times come we provide to metrics. Rather, short, wait experience customer improving every resolve focused I rolling intervention. coming on and majority In satisfied down. this continuously wait will times quarter without self-help We providing are worst the case of significantly. provide their human NPS with by superior the problems down are quickly option measured the we We tools updates out average on to this customers our began that quarter. want

turning our Now markets. to

the and quarter. XX% recently In and We IQ the to revenue announced started APAC, market U.K., Germany in customers to Switzerland. the with ever our for XX% first revenue and Europe, market to the region. maintained Benelux quarter and XX% countries quarter was during along X Austria other quarter first down up In U.S. European shipping was lead our was year-on-year. XX% sequentially year-on-year. forward X increased look introducing and XXXX. year-on-year. IQ We share first This U.K. shipments up sequentially in and and grew for We during the quarter in in product sequentially largest the the share The X% the during XX% France

This America, technology to natural the quarter nations announced of India. of IQ microinverters market Latin grid where QX approximately as is recovery solar Our of the XX% a will product in Puerto the to disasters. susceptible last compared India the The to hurricanes slow to fit In across the the family devastating in and operate growing and business began Rico designed be IQ continues island on availability X is ramp, perfect is such India. dusty after rapidly increased conditions in our its harsh recently microinverters and we IQ year. family for first revenue based Ensemble

pricing are gross As product new efforts with paying have management, a These laser on supply margins. off optimization company, continuously chain focused we transition. been obviously and improving

continue that on add achieve profitable to line offering In top With these starting the to order installers work to company's products becoming to we DNA, ingrained now we differentiated need value and into homeowners. the growth. are this,

the world. The in expect in limited line QX the line rollout for rest IQ X the the the IQ our rest ,we for QX continue seventh-generation did of IQ X Note In volumes, well-controlled growth top world in a expect expect of product. introduce transitioning have X product X QX, such the to that fifth-generation we and to first which in is the with is were and ramp; transition. the significant plan to In a directly QX, transition. lever started from we complete the IQ ramp and to ramp. We

IQ This rollout XX. look us solutions This to resolve of believe a is the worldwide efficiency the both its will working X. our diligently are XX.X% help significant approximately our discrete XX% issues. product new our XX line top and We address to access IQ market to IQ America to lever available to us in and XX-cell are address modules. X a with component IQ with enable was not CEC forward possible continuing which We in market of increase served to We a X its release experience growth shortages market. for will microinverter high performance represents with opportunities. worldwide, North The gigawatt IQ SKU next

PowerXT-AC. introduction for module. is Module, lever with of the recently partnership Energized Solaria line a AC top announced for AC Enphase We Solaria strategic growth The the third Corporation

high-output XXX-watt be equivalent with Solaria IQ microinverters integrating will Enphase PowerXT XX-cell module. its X+

first in XX.X% HIT its stated XX Panasonic last kind. are of CEC module our XXX-watt in we the As conference IQ with to This will efficiency, into working with result call, integrate Panasonic's high-performance module. a

We IQ We modules on X recent So solutions to logistic let me again XX% of now microinverters different remind installers high-performance, to IQ and up inspection solutions. this we believe discrete module long-tail residential In when their time will Enphase with offer experience, of for to XX%, XX. X with help about up simpler the X+ well-known to pairing they savings procedures homeowners. once brands X, and the high-quality, benefits solutions you on interviews have IQ module. AC reported AC module savings based customers compared AC installation conducted IQ an

next-generation upon you the grid-agnostic, yet technology by future opportunities. important creating growth. our called product, market on to new line capability now has which that X Ensemble Let me exciting and IQ our our update top transform always-on IQ based our is catalyst for another is X

tied. As discussed, what platform one is previously this the storage, we and we unique to solar that provide grid means grid address generation, solar's fails or completely X has absence based The the and is energy storage on and if will grid have of regardless no be capability limitation, there What energy Ensemble day grid-agnostic is presence system is same With of all continuously production IQ the cases, the still is technology will tied and at always communication can have the your IQ grid on as night. use during solar bigger invented grid. out shining, This a That software. is a of that is it system. technology challenges agnostic. X, of It microinverter refer have platform. you we to that To off-grid, includes address sun this a on.

the phased milestone in feasibility. between upgraded by 'XX off-grid technological introduce in software to the productize the IQ solutions systems grid by QX plan grid significant future. mode the manner can are of last We in solutions on absence with performance of grid-agnostic agnostic depending remotely installed in we We quarter These building seamlessly These the of transition off-grid beginning grid ASIC on become the systems off-grid a depending be then established to or when mode X technology tied can we continuing on grid. in XXXX. function and to solutions achieved X the presence followed

only to outages. for stable weak grid regions useful access feature grid-agnostic unexpected for against insurance grid regions be this policy no grid but expect or also as with a not valuable with in We energy

progress We you over In summary, will with we during the X's continue quarters. to pleased are overall progress past coming on months. our X IQ the update

gross customer profitable to top we along now are applying margin the drive experience. best-in-class on with line and growth We rigor improvement discipline same used a

discuss We turn I to review like successor. to the XX, continue of Bert I Enphase orderly years to Bert turn financial leaving Bert a mention other his well thank endeavors. call I With opportunities. an So and for before to him our replacement, is transition over is announced identify result. XXXX. results, we until and his will external service over to CFO X the to his as future our would financial in for to search June his wish that An our of Bert underway He will him support that, Bert? today call will pursue

Bert Garcia

details the to business our Thanks, as related well as Badri. for results XXXX our outlook financial quarter. I'll more provide first quarter second

XXXX, of microinverters. Approximately XXXX, largely quarter unless X% in otherwise a year-ago the basis net approximately that of XX% Total of increase The which was reminder, increase XX% the in per were measures million, of DC decrease XXXX an $XX a of XXX I'm XX% sequentially microinverter our of are XX% revenue quarter decrease provide a for watt on megawatts in of year-over-year. quarter. changes noted. increased a IQ new megawatts first of an XX% non-GAAP by from financial shipped as and mix. quarter result We to As of DC fourth Total and megawatts the the going XXX,XXX the product a systems. of shipped revenue sequentially in first represented

our to Envoy of the we the as the revenue results. compared our percentage solution, AC includes XX.X% quarter U.S. As Gateway in of fourth for product during Non-GAAP revenue, shipping Badri the accessories, began our which storage Battery first gross and was IQ to XXXX margin all for compared first quarter prior increased a quarter. Communications XX.X% quarter. Non-inverter mentioned,

note million The we've impacted supply shortages, approximately We affected QX. million compared the negatively to our first our management, the margin which continued to $XX.X the QX be expense continued gross by are X%. by in optimization pricing that pleased quarter gross and $XX very for transition. operating was XXXX with IQ Non-GAAP I'll component chain of increases margin. reflect progress we made expanding

XXXX, commitment dramatic of This our of income quarter. from income was year basis, by we establishing $X.X underscores reflective million solid is a our As past work QX non-GAAP towards non-GAAP XX% the operating a and compared in over expenses million. in of and foundation. financial loss On to compared to reduced $XX.X quarter a the first the operating million in year-ago hard improvement or $X.X $XXX,XXX operations

first as hand ended We management. capital inventory March to quarter levels XX of days XX of $XX.X turning Now compared were working days the days QX in the the quarter sheet. Inventory quarter. our year-ago quarter. Inventory the quarter to with in improved and we XX for year-ago million last XX, balance as on $XX decreased in million $XX.X the from down levels fourth million and

Our in of Badri private increase quarter previously inventory as million to exited cash $XX.X a X level key and XXXX. from in net compared remains $XX investment. days, target our million QX of We the balance inventory total is cash mentioned, announced XX management the with proceeds $XX.X includes management initiatives the QX. The million equity

generated approximately from $X.X as quarter, in we cash as cash the million $X.X positive flow. During million operations in well free

Now at second our the let's quarter look XXXX. outlook for of

XXXX revenue range for $XX of to to our expect million. a of be $XX We within second the quarter million

Turning to margins.

expedite resulting shortages. our a XX% QX and to margin be We range negative Note of fees that the higher non-GAAP gross gross margins includes industry-wide within from XX%. GAAP expect component guidance of to impact

second $XX.X within be million the million expense GAAP to $XX.X of $XX.X compensation range of a to for to stock-based million, and $X expense including $XX.X an quarter range operating non-GAAP million a expect expense. million to be of estimated within operating We

people. continued talented throughout of the open questions, Directors course, an of X to we'd the up truly wish many of team Before past be I'm take vendors, the our partners, the Enphase fortunate success. to the of a I and my employees, so thank worked support honor be years, much company to CFO shareholders say want their Board the the incredibly for it moment and has been to customers, to have Enphase It has line privilege Energy, years. part been I'd great like to for and dedicated with and for I

up As new Enphase questions. orderly line to helping committed open the to Badri CFO. mentioned, transition for I am through an that, the With I'll

Operator

Instructions] question Capital [Operator Roth will Partners. the first our come Shen line from Philip with And of

Philip Shen

a some that know focus some on of been now, yours and of is for time Great the perhaps volume. job trade-off that's margins, I part of

I QX flat and With midpoint I QX the you guide QX in of being the think it's roughly flat the than Do year. slightly still trend this for expected, growth is that weaker expect still X? early. year-on-year know

California California provide XX-ish don't the of volumes some down or PG&E official the You guys guidance, in for that data the percent. -- PG suggested data but you sorry, were

X. of through see So trending just we and as volumes you QX also kind walk us revenues how into and get

BadriKothandaraman

your thanks for questions. Phil,

that clear priority should solid we market top a all think is to share. to So tell let how me you financial about foundation. build It be very guys you our

on cost. are at profitability growing We focused than consistent share market any

be X top line not regional profitable performing said. We to are consciously said walking we away expansion from before. empty X for multiple calorie business revenue like the we margins the And that, where ingrained I growth. have us are helps vectors on DNA, configurability top IQ Having into was work starting are X which of our IQ line software is and are repeatedly gross or our compatible to regions, on great that to since growth into possible

a we roughly and something now new possible solid that partnerships. on the not are was possible XX with of where was that XX-cell IQ gigawatt adds not is of modules, IQ X, course, So ACM before that addressing market. The color

partnering with people. a We number are of

We have in we modules X, IQ announced And XX. IQ works. some for have the are AC X+, IQ

Ensemble. a future. That's the in least last X going AC So our last The one, we is modules. IQ big to are believer but not in propel

of announced grid-agnostic our 'XX, solutions that to we in introduce XXXX. fact, then In grid in we by going solutions are QX followed

we are Enphase. the compromise profitable is we you growth. again, think main will But not growth whatever these that X So should the vectors message do, about

Philip Shen

that's Great, really Badri. helpful,

year? QX. of in for Would seen revenue sense acceleration greater to can and kind the some these when really the that, on Or expect be growth us up your growth you kind from a you it pick that year-on-year next we've to could opportunities as given flatness of sense -- give nicely? accelerate to in starts So X? QX What's sometime

Badri Kothandaraman

numbers we for little I bit a about vectors. be to you I'll And very to guiding And out. coming IQ X let color I product or not have some transition. all on me the but are add the tangible think transition, X they're the QX, talk the going and we any Well, told QX IQ X ones.

shipping QX limited ramp. controlled of IQ X, X quantity 'XX, a IQ did the of by was started U.S. a basically, we in part So plan We which as

X% fact, In of shipments QX was our 'XX in IQ X.

As number we will IQ that QX, proceed get more to better, X shipments.

start introducing will We the world. rest X to of IQ

X, 'XX for QX complete IQ XX. IQ introduce ramp the also IQ significant we'll a X 'XX. in will We be transition QX and will

told growth So the on of already the that of line X on gives X sense line transition. some IQ are IQ X I you X the dependent time transition. And you vectors top

So I'm answer going question. to your that's how

Philip Shen

Badri, you targeting X. full guys that that's IQ QX super helpful. as I of are ramp-up know the

specific If QX kind the you maybe maybe feel any of mix those X around in in that numbers appropriate? great. numbers X, can and QX? and kind But ballpark for IQ put XX% we be Do would XX% QX of looking at are

Badri Kothandaraman

to but ramp what in I'm in like in progress QX, QX, not going numbers, provide told X% you, completion in conversion QX. QX, incremental big Phil, I

Philip Shen

One last it one, I'll pass on.

it you exclusion on be able based it. module, is good you on XXX relates shot anything have the work, to potential? like it share our there I to seems tariff As know, the AC at might

get you as not well Additionally, guys. I on To it? be as an think might comment SolarWorld think you left to can or what whether you you for opening degree timing able

Badri Kothandaraman

Yes.

make ruling. let the general some ITC So on me comment

we expect modules. did impact the the AC not ITC on what we ruling, While was expect

process working are on of exception portion microinverter to an ACM. get we exclusion the on So

hear to from have and their the end to June. by to of submitted them expect We exclusion the USTR, we request

this strategy, doesn't said, as Our change Like tariff. significantly profitable does that what a not change. company I overall because of direction growth

of partners, a affected some by are number with some who are of by working are the tariff. not affected the tariff, We

wait we'll that's but our So and watch, strategy.

Operator

Craig-Hallum. from comes line question next the The Eric Stine with of

Aaron Spychalla

It's the Maybe the ramp the Can QX Eric puts rev there? guide. depending kind controlled bit and a IQ for or market are the diverse? Aaron Spychalla just talking little the that Or anything X U.S. first And on maybe takes you're there looks, talk drivers about? the else mean, just Stine. primarily conservatism there? of is I on on those more about how for you like just the is then X

Badri Kothandaraman

between is IQ the mean, I is the transition, said, line vectors also the what Yes. about we million. X and talked it guidance QX I yes, Like $XX million top $XX for X and about growth.

we So rest of the X introduced X into the 'XX 'XX. introduce We now QX in in first into expect to introduce world. to of in IQ QX X, quarter the as of We you rest the Americas. of IQ world IQ expect know,

that happen. ramp compared be QX continued X% number you. a the QX so told ramps Then, Like where significant QX ramp. I and will And to is a what the complete. will be will said, QX I

opportunities So some transition. time of the play working into along start on coming opportunities, top that during with we our that are will line

Aaron Spychalla

maybe of year-over-year kind of focus are that? basis the kind you then you What inventory channel? anything of margins moves through great give on thoughts your on XXX the your said something as the or this like impact just pricing rest just us Section pricing an quarter. update been And like And broadly second for management on has a then key pricing. Can on Obviously, a outlook? and year

Badri Kothandaraman

pricing. color you give some Yes. I mean, on I'll

have gross margin. So three levers we on

The first management. is one pricing

The optimization. second chain is supply

product third The is transition. new

Pricing to about a talk VP almost pricing. I'll us We very taught He So how Pricing important us. hired ago. a to year of do management. been has pricing

look look alternative. pricing. at The best add value So is we value-based we next basically, alternative. next on that what way focus pricing at do is Then, we of the top best we our

So that has lot. a us taught

perspective shed Also, addition, product think a side products more That generate in In segmentation, calories. be the are products transactional to blocking pricing order how we and and the one sure has about we can we discipline. way about we making to tackling that profit segmented been from on empty value. those focused think is like, are away

changed game change. have a flat. pricing couple our quarter. With regarding for was how There we pricing, every been for model usually has And not pricing. So model example, much of on our basically, we 'XX, we QX percent historically,

the we In fact, a -- XXXX. little for X% erosion the in mean was But quarters X erosion, bit. it quarter-on-quarter model up I for price

Aaron Spychalla

the you any And last down South opportunity can in investment for a and like timing? the and prospects bit this helps the there, Maybe me, that thoughts on little then frame maybe strategic America just what investments? about opportunity following talk how the looks out,

RaghBelur

one when are microinverter is America is, This our the of expansion, to defined, benefit South line of think is Raghu. available America in growth certifying as we the software the we top of Latin about again, being regional well. initiatives, because product be now

product share So gearing you details market. that we over plan the to about time, itself. into But market up we'll yes, are out with our more get

Operator

And the Osborne Jeff next question comes with from the line Company. and Cowen of

JeffOsborne

XXXX. questions the end. that half How that noticeable folks OpEx about think into second One there Just perspective? seminars plays year see you any training my we we'll is from in the out? a do, that P&L as from and All a and on increase do of is international the couple expansion the

Badri Kothandaraman

OpEx. I'll the So go to

as OpEx company. have We significantly reduced a very

have to dropped $XXX XXXX. from we XXXX, million million in $XX in So

XX%. is revenue. we seasonality because expect do due consistent primarily non-GAAP little our OpEx 'XX of model, XX-XX-XX QX which OpEx Our means to of a to close higher, revenue the long-term to with XX% be operating But QX

key by as we well accomplish a R&D we things in as we have And there do can low India over certain which on, important strategy point profitable which that OpEx need. is do have all in them. investments We India, on center top have in the and and And we not XX will employees opened the line addition, growth, will India. now is make an compromise we we we most

Jeff Osborne

That makes it. appreciate I sense.

of the a the prior X-ish in that And answered pretty in customers? half, Bert, is in of caller's the moving One, of environment terms what ones. conversations based quick question. with ability the then quarter change update facility terms the you in interest of other forward? sort that, your in But competitive each to Or think do you're it you expecting the on sequentially two that on with step-function ASP? percent just Just second consistent there's expense kind any your the of terms renegotiate Tennenbaum

Bert Garcia

first the I creative in from we of anything a a think XXXX. of what Badri result, little imagine, principal the so answered can quarter was terms get don't to financial to ASP out Respect pretty facility to to did the of you Tennenbaum gave results. That little a add our improving in question them. so opportunity as and facility, Yes, with the constructive of well know, direct do out of that are, more XX% get to have as push I that. expectations you on bit of bit It that our recasting us

similar As constructive the opportunities we similar something believe we continue will the to Tennenbaum, to continue improve with of our do do half financially, year we have in do and on radar. that's it work back financially, and definitely improve to to it's expect

Operator

line Brad with And Research. from the AMPAC question the Meikle next comes of

Brad Meikle

of Meikle, Brad It's luck. Research. AMPAC Bert, best

Sorry timing January of next do leaving. that X I planned the a Or guess, questions. X, on that? is of for you IQ to the you hear initial for sense shipments? have year And

BadriKothandaraman

the in said, we off-grid plan followed first of half and as Brad, So solutions to of XXXX. 'XX, by in grid-agnostic release solutions QX it'll the we the be

Brad Meikle

terms balance IQ and do you IQ in the expect think to similar see of penetration? Or you X shipments? still X to slope would And of ramp some you'll the

Badri Kothandaraman

we'll X cycle out of learning a predict that X market, be there. brand-new there Well, bread us the It's learning. will And have and butter, sure but good cycle brand addresses news there. new to we'll is a IQ the you a market. IQ is through but address of for our product I'm go difficult once ramp,

Brad Meikle

thinking Obviously, and terms of the not or So quarter I your has in fourth been X. IQ X of international, third the so ramp. about guess, business XX% IQ

pass margin margin customers a from I boost capture And XXX%, going the standpoint the that yourself. much that. point ramp, incremental at with see you guess, off to are nice a versus to question's So you I how guess, along

Badri Kothandaraman

we world. America, see XX% means rest basically which you versus North If is the is XX% North international our had XX% basically America right, and of and of mix XX%,

to rest So it's it important more on of our grow note, the that is the the world and We And business. want of directly the fraction a and is product. the world to fifth-generation of becoming transitioning more. rest product, nice to is seventh-generation

Okay? that margin. color the So you give on should some gross

Brad Meikle

the terms ramp IQ are How the costs X looking reduction the that? for cost in of for

Badri Kothandaraman

not way think matter we to be supply numbers here. out have costing Well, due costing. right, a example, cost means going are you always means multi-sourcing is, giving cost, component the what for to we have initiatives, we multiple But about our which chain the strategy, physics-based no X-based sources; which approach,

principles. and you from the the calculate at the look first product, cost stack-up You of

this The and in third of terms performance suppliers clear accessories getting to basically, fourth fraction is business. reliability, is be that terms of supply having The sizable is not cards. methodical It's focus previously just score microinverters, terms And our the analysis, a about so in of of and analysis of was selection one chain, quality, on on because supplier methodical focus accessories. in their neglected.

lot Now we service, warranty. the the efficient and matter is last things blocking like hidden variance, things are overhead a applying there. of are they the overhead. overhead, there, like No one handled, costs like we There lot is constantly is that. basically is inventory, is, things there are stocking, The RMAs, so of company way focus how freight, and tackling

the strong everybody with process costs in that is the engineering this company. part the is we is So It is CTO. where I not management. control program as just guys. most business And important It's chain along improvement. about cost It supply think the a involved team the the in

question So terms in doing I'm answering just directly process a we is of what the cost, are color your I'm not you methodically. is while giving business that. This on

getting everyday costs grinding where are that's and better. are We

Operator

of from The next Rusch Colin line Oppenheimer. comes question the with

Colin Rusch

has talk to that development quarters. to pace fairly and continue optimize going basis? platform the the just the on expectations is quick the mind supply Or to pace been The here the you profitability for you of continue going recent about down whether of a Can company? that to mix slow and are multiyear chain over

RaghuBelur

Raghu. is This

So the cost. the is greater is our of the itself, as lot to heart drive in the continue ASIC, system ASIC think our for the a it we us lower as chip and ASIC, development well opportunity order of the of way is rapid to of features there's pace the functions about and

Just to you you or million IQ has X give ASIC gates. at if ASIC, it look our an X.X example, X IQ

at our us leverage fully terms million well huge and is as of IQ back X which ASIC, is in look you functionality. of we amount operational, gives cost X as mentioned If came gates,

the thing inverter cabling, the of driving, the account the into partners. Now the you et keep the that to efficiencies may we system accessories, other our say lot is, installer advantage platform, is is we itself when changing. of brain change cetera, to system, unchanged possible. the of to try a The as you're bring The of those take as yes, rest because

better but exact, balance on they're and the cabling same get the cost better inverters same systems, get they functionality. and of with when same the lower better just So system, installing roof,

Colin Rusch

figure point to guys utilities to these working can in in been capabilities cases. the give an those that you forward? with and terms important locations, couple out data on of upgrades follow look at of you're various done obviously, and going those you and where us to on just update business of monetizing inverters the model optimize what some that how like can But data with management use of And about you've a collection, have

Raghu Belur

exists what it. can always with can you you about data That and the promise do monetize

but of time, not extremely terms at So anything monetizing are in data valuable. announcing we is this the data, the

Let on me like little in generations in speak throughout about as greater generality greater. platforms or becoming the progress inverters, as of our software we that and is change more reliance

being and becoming X, and more more software between into more to capabilities more to software upgradable are more and So X more X it's software and included system. the functions defined,

at But to business time, is this there in opportunity what will So have now. still right long term, that the the that. be we believe plan do we

Operator

Molchanov comes our with from line Raymond Pavel And James. next Instructions] the question [Operator of

Pavel Molchanov

essentially but Another I a that We market. of that actually out saw here, weeks sold had talked about not the they few it. they of from think perspective. have other kind any trade but microinverters word And is side's question ago the Huawei pulling U.S. headlines

So landscape. I'm about are that the it curious your thoughts competitive suggest and decision might what about

Badri Kothandaraman

we mean, been in We heard hearing year. a were I last the have that they lot in about Huawei Europe. Yes.

a But hearing are Things the like be U.S. can Now Competitive plan solar dynamic our you in phase. what QX. change. very strategy said, is we dynamics they is to change in that amazing. fast. And doesn't

my the We X that are on of vectors the And focused profitable and counts, for in that's is growth. us, of line the product top growth. I differentiation line it top what articulated

Pavel Molchanov

we how also Can get an things with on are battery looking update the product?

Badri Kothandaraman

that on and both we quarter, AC Australia. you battery as Yes. we a the uptick seeing well Europe Basically, are update in uptick product. every from I'll a Battery are sales brief as give comes the seeing sequential

Our start later. is the small modularity Enphase to system. I small pretty of X.X is as very It to then and is the say of value easy combined the installation ease to modularity install, it with kilowatt-hour, easy on add it's When simple. battery, proposition available

that's has it So started why selling.

there. are So we very happy

there X, is solar said, repeatedly However, we On IQ like have to central develop IQ X. done. more what as work a be plus strategy I lot our is storage to

solutions, start will lot more of a as release closer to about we when we So storage. come 'XX, off-grid talking our we QX our

Operator

B. And the comes from FBR. the Riley Carter question with of Driscoll next line

Carter Driscoll

Sorry SolarWorld. on agreement a you. Hopefully with acquisition the I and/or of SunPower's module recall AC you The SolarWorld, the all bed put terms quickly, given you question to new opportunities to more either parent? with Bert. I of working for for restart -- had the a on was its if had to go, new side Is SolarWorld opportunity acquisition module at or the a see

Badri Kothandaraman

in I'm the happened I last the of were year, close, We that believer last working correct. from opportunities the cetera. sometime we closes, is the SunPower AC to et modules, in at AC the are come. SolarWorld, thing strong have and like In AC announcement with a modules. is said, And SunPower. about acquisition when acquisition you the Yes, year very strong we going are sure believer an end heard sure a module will we are what Once we ready Once before did then not and SolarWorld. towards also

think there So I there. is lot of synergy

Carter Driscoll

Maybe of you just in the product? Can integration somewhat about module talk Obviously, timing because position have X. follow-up with has to that. a Tier their a U.S. unique the the Panasonic's maybe you lot making a of inroads of and

Badri Kothandaraman

Yes.

with we X-phase will So it XX That's combined and channel approach. discrete it'll introducing phase. a where IQ product, XX-cell it the is is the be are into with go One first panel. first the

microinverter our where their we in Japanese. with order HIT And integrate Panasonic phase second XX module. are is -- more into you The IQ is know that working the XXX-watt to expect full-blown are be right? important, on on later ACM. XXXX basically, the that which available is the They going quality, to the stress So to part the by most we of

Raghu Belur

This is Raghu.

to our IQ discrete in Just the it QX. the is introduce solution, XX, plan

Carter Driscoll

me. more two quick Just ones for

particularly least out You to your just Latin X you take X. Trying be solution roll let's you what basis grid mix of that Is SG&A at then how potentially to target that something region-by-region that mean, approaching you as it take a it's think in as How talk for There's a on incremental do basis? an think about some different your IQ it? of I of, mean, had in think diverse. inroads of very spend market sales might vis-à-vis I that established try a about stable more do or say, America. your IQ perfect approach you a do and to any country-by-country you IQ markets? X. And spend to market? and obviously,

Badri Kothandaraman

Yes.

IQ Let you X. on color me some give

basically, So called was Ensemble, IQ Enphase. a X invented here is as at upon brand-new based technology which

feasibility that you the are X storage, functional. IQ consists getting, remind we and we again, last I'll the in completely got energy when mean, was software. once As past, I And quarter we the ASIC communication technological said generation, of energy

you X agnostic. tied. be use So It grid could addresses like, said. be could grid. It IQ off like that cases enormous It the is is grid what

SG&A the a we are first, going phased we everything. to the Africa understood are is off-grid introduce right. us begin. and It attack market, go to don't for to be go and will off-grid and grid Those markets gain India we India. market involved, the market But market, will the would in involve places And have introduction. is we weak while to places where you're basically So is no-grid are which it market. obvious spending. some the Africa claim is In for share

more partners, but We comprehended in there, a to you're have few that so exactly enter come may places. right. We with

phased are about the said, we a approach. are you and thinking We way it adopting

Carter Driscoll

question, a the just then And level. last high

by a XX%-XX%, just NA-rest get year-end more you split just of XQ X that you and of 'XX just ROW or top-level the likely XX? XQ, ramp X in mix. mix trying and on take you parity world, probably posted, that'd the based could the to Or And Given by hit geo by IQ full rollout? be a hit X when

Badri Kothandaraman

growing between is quarters to Europe abstract is for now about us. more and if India lot want are there I XXXX. it, But I'd growing. be say Yes,

in we if frame. a happy time be would to can get something like sometime I XX-XX XXXX XXXX, So

Operator

does This back today's CEO, for over session. conclude Kothandaraman, question-and-answer would Mr. turn closing remarks. the call Instructions] Badri to [Operator to like I

Badri Kothandaraman

All right. Thank you for joining us today.

profitable on is with have started you speaking our quarter. look forward you. call next Thank again several execution we very line Our and for top growth. working We well, on to XX-XX-XX going initiatives

Operator

Ladies conference. does and today's conclude participating for your gentlemen, program. you This in thank

You may day. Everyone, a all disconnect. have great

Enphase Energy (ENPH) 1 May 182018 Q1 Earnings call transcript