ENPH - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Enphase Energy's Third 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 call is being recorded. I would now like to turn the call over to Christina Carrabino. ahead. go Please

Christina Carrabino

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

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

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

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

Badri Kothandaraman

and third discuss of for appreciate differentiated afternoon, customers initiatives. the We XXXX $XX for quarter. thanks service Good products, us third quality, today to reported The our revenue financial million our continue and quarter joining of results. to

Our sheet strong instrumental increased was driving demand. balance in customer

in shortages Our revenue that supply meeting by biggest demand. than million. experienced challenge $XX QX additional constrained We our was more this

QX, we booked For seeing already. are fully are demand strong and

in as We expect to supply be well. QX constrained

income gross margin Our the operating was million. $X quarter non-GAAP in non-GAAP and was third our XX.X%,

report income. of fourth to We non-GAAP quarter are consecutive positive operating the pleased

We third improving have also with made a balance We and our lot transforming quarter exited operations. company's the of balance $XXX.X of cash progress a on million. the sheet

talk our in about target XXXX, to for XX-XX-XX of a Day income. XX% stands gross XX-XX-XX. commitment it meeting introduced a with We model Analyst will XX% I XX-XX-XX the and XX% Next, at operating QX expense, financial operating concept in June 'XX. margin, of

growth, experience. have past service to of of customer are how the the and is is business, customers top us. our perceive customer exceptional quarters financial and that focus results We the have realizing An improved to consecutive our detail five will are we XX-XX-XX. go performance, very greater later quarters important financial now reported of Eric discussed deliver ease over doing Quality line item about cornerstones into our few and close objective in call.

as of in development aspects or are prioritizing customer experience all our processes in one we and number business, operations. product be it business Our maturing, are

center our in to customer online During QX, improvements make we contact several support. and metrics continued

are A surveys was key Enphase we customer calculated feedback to on or This Service-on-the-Go through customer or likely metric to introduced now mobile enabled Score Our majority handled quarter Promoter metric is customer customers last of a colleague. from self-service via claims NPS. has based to recommend Net be experience friend on devices. how

in Our over versus in QX. customer XX% XX% QX, NPS service was

the making service made customer with last four our quarters, We it improvement business easier significant have in with to Enphase. do

to in target higher XX% XXXX. achieve NPS or of Our is an

talk we production all about AC to barriers on tariffs. tariffs and know summary, tariff. XXX to factories is an the know about XXX module to see Many up, of counter beginning the are recently and exemption cells modules. partners tariffs. seem We module SunPower obtained from their easing now the AC Let's U.S. in all our Also, building the ramp. we be In the solar on

accessories. on to Let's impact which on move microinverters September, and their and Enphase now XXX tariffs, late became effective

a the North mitigate additional tariffs, streamlining line will cost agreement customers manufacturing This U.S. will to include our Enphase customers the also Flex QX the in 'XX, serve our American Mexico. only begin delivering Mexico Mexico of similar to the market. and We produced as cost products cutting by XXX in better increases manufacturing with at mitigate not to Flex our with in help Enphase sharing China. tariffs expect but expanding down cycle and to inventory times by Starting

for and and our turning international our Now, markets, XX% QX respectively. XX% to was mix U.S.

Third IQX, and due [ph] decrease entered in in APAC, QX. legacy X% The and the inventory in to in quarter, and on and In solar to flat sequentially, German Europe, with lead shipments We with market compared Benelux was channel microinverter were QX QX. our in XX% revenue our during France, We XX% the quarter down X% XX-cell microinverters. sequentially Austrian our IQX customers share and was to In year-on-year. revenue Switzerland the develop revenue We year-on-year. IQXX, was markets continue our to relationships the X% to along X% year-on-year. ramped maintained sequentially the up revenue customer and compatible up and U.S. down U.S. up was modules.

also down across to inventory We the In XX% bleed to microinverters with expanded and sequentially expect IQX in experienced quarter. quarter, America, we quarter steady the Mexico Asia. our We third in out was partnership revenue up year-on-year. during and XX% BayWa the the distribute Southeast excess Latin fourth growth

financially through we my of a on Now achieve We spent time stable, top products. are profitable growth. portion line differentiated large this that plan to is growth

regional profitable and growth line expansion, and technology. for modules, IQX products, remain AC top Ensemble levers high-performance storage four Our solar and high-power

Of experience growth. cornerstones course, quality line of this top remain and customer

The We first transition IQX Approximately QX. top were up shipments had a profitable lever is and regional in the growth from IQX of in significant microinverter expect our for QX. IQX, complete XX% expansion. QX, ramp in QX line we to in XX%

shortages in As on earlier, supply we I mentioned QX. transistors high-voltage experienced

situation We continue early quarter, in and fourth investments of XXXX. constraints made the appropriate the in expect have majority to alleviate this to

high-power lever high-performance profitable The line top for is second growth releasing products.

efficiency than the of value up modules. higher is its it generation which family cost architecture enables is is IQXX lower a to our of integration highest power IQXX for PV seventh CEC IQXX, microinverters. first quarter is improving XXX ideal in product IQXA, to thus watt to The modules. to introduce plan for watt and customers DC XX-cell at higher highest variant know, up of margins. that DC, power even gross incremental into the AC efficiency with XXXX, XX% product modules you and new to address XXX of As addresses The benefit We our our us,

top Last strategic announced profitable develop LONGi line week, third energized LONGi to a with lever on partnership for we growth ACMs Enphase AC or The IQX. Modules is ACMs. based

power of available the XXXX. of of the and we acceleration fourth the SunPower's throughout residential supplier model-level the the ramp shipments in XXXX. Enphase U.S., and fourth volume in be U.S. to ACMs these in anticipate microinverters an now in is exclusive expect quarter for electron business We IQXX quarter, starting

at to with million U.S. $XX Since add module LG, and manufacturers SKU competitive reduced to developing of gross in be October through Enphase XXXX of AC been XXX revenue to capital These installers in margins. release their allow our expect We adapted acquisition from the non-GAAP Solaria, ACMs in partners in annualized Energized installers labor $XX such Panasonic, installation. management, of from accelerated XXXX, systems Modules. to installers and Energized management design Both joined have by more [ph] Enphase to SunPower XX% improved module costs, XX% and this the as LONGi integrated second-half million and leading

IQX hybrid Finally, four component is between. called kilowatt switch is the Ensemble. energy from grid a XX.X sophisticated transfer Enlighten kilowatt IQ hour, configuration combiner fourth and cases is the communication circuitry, capacities components: grain system and our energy use has address of always control, the the which which line on Ensemble that agnostic its box provides for which and consists microinverter, software. control, hour, storage catalyst any grid-tied capabilities the with grid and X.X big is off-grid and based software can ranging and The in hour, to which cloud our IoT technology. load agnostic top system possible the of automatic battery is kilowatt This technology storage system growth on with generation, The XX profitable solar upon Encharge fine

Enphase bringing Consequently, us. agnostic In complete turned addition, is just energy configurable a within and pure-play growth system off a technology transition Ensemble enables options company the business many to install service company, one solar a for in feature software the grid software our to on be system's the IQX base. can the from of through microinverter substantial enabling opportunity remotely. microinverter future of This the about management a

agnostic technology. systems IQX expect to and energy pure $X,XXX with home XXXX, to We selling over realize still first-half potential QX management while systems from XX-XX-XX. of approximately selling revenue per systems to our introducing solar home customers the the We by XXXX, microinverter anticipate revenue $XX,XXX meaningful to storage and grid increase per complete adhering in Ensemble

to we QX discussed. microinverter as expect release limited also previously 'XX the in solution off-grade in We quantities pure of

our In the top With to shareholder tested. completed to to off-grid necessary the our supply In have is near-term, additional safety unlocking value. being demand, his and our financial Eric profitability chain We the by is is for meet creating years, improve the quarter-on-quarter, summary, our home energy to the growth currently and certification vectors, represents customer the system. optimize increase field priority focus product a In review manifold our turn will transformative of Ensemble the next Eric? providing results. to call complete management few that, revenue Enphase I for over providing outstanding experience. opportunities

Eric Branderiz

Thanks, related to as provide will as quarter well results outlook I business our XXXX our details third the more quarter. Badri. for fourth financial

going a basis, non-GAAP unless As measures are I'm financial on provide noted. otherwise that a to reminder, the

year-over-year. Envoy XXXX today, the million, an which earnings financial of found revenue posted can our We includes increase of XX% about the of Solution megawatts of which X% The which approximately megawatts quarter. XXXX, these AC to and compared Relations also Total for an of as increase year-ago be in IQX. Storage the Communications the XXX represented Non-GAAP increase have Web the of quarter X% third and and sequentially, our in was second Battery XX% quarter. shipped site. quarter an provided XX.X% to of Gateway non-GAAP and X% our megawatts for in section third for the Investor financial sequentially, revenue reconciliations of microinverters, a GAAP percentage prior a of compared quarter from third of $XX release We in margin increased Non-inverter our shipped were decrease approximately measures was XX.X%, measures quarter. DC of XXX,XXX revenue, accessories gross XXXX to

pleased $X.X partner. continued We an The pricing million we transition the IQX, margins. IQX gross and with of progress from management, our initiatives achievement the increases the our to are targeted that have reflect expanding milestone made

of for XXXX. compared third to $XX.X in our be and third to fees. the were $XX.X of quarter negatively margin were expenses operating quarter for X% million quarter for included Non-GAAP our a work restricting for compared our $X.XX of a $XX solid GAAP affected non-GAAP million, of in $X.X operating in loss million stock-based of by foundation. This million acquisition-related shortages, $XX.X financial $XXX,XXX income hard gross expenses improvement resulting quarter which of per expenses, expenses, the On share compensation income amortization. $X.X earnings operations QX, basic quarter the QX approximately net of million expedite due income reflective $X million a is for GAAP operating and XXXX. diluted continue XXXX, in expenses quarter. approximately from QX, of non-GAAP $X.X and compared year-ago year-ago in the expenses share the million the $XX.X $XX.X to quarter million third to establishing XXXX, earnings third basis, and the was $X.X by million third $X.XX. operating On was basis, for in commitment in and $XXX,XXX of a of and and of million We per component underscores to impacted million, QX

relationship and our second from quarter, September management quarter. third at for the quarter of in We [ph] down inventory last operating adjusted million of both XX customer to quarter, QX QX from year-ago flow million a were million been includes XX from sheet, $X.X quarter, the convertible XXXX. $XX.X hand in would $XX.X turning approximately levels to days balance out on have cash balance net year-ago $XX in million the The we Inventory as offering, days Now $X.X payment million SunPower the the the in from in We generated million in and QX. positive up as for quarter. $XX.X and million operations key balance flow. of compared to in million $XX.X days The $XX.X of in a debt exited of remains $XX payment intangible. acquired XX ended inventory of $XX.X proceeds the a to million well free XX, cash total cash flows SunPower of cash in $X cash from We million. one allocated compared in million $XXX.X cash with $XX.X as operations, management the as million, approximately initiatives million to

the for outlook quarter XXXX. our of fourth discuss let's Now,

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

gross GAAP fees, and X% to Turning we resulting to our XX% XX%. shortages. be component that to a expect margin from of of within gross QX margins, expedite non-GAAP approximately higher Note includes industry-wide guidance margin range

or expenses, $XX $XX $XX to total in expect million, a restructuring stock-based acquisition-related expenses and million approximately additional amortization. our expenses, million within [ph] of operating $X.X and We expenses, range GAAP million a including be to compensation of

the non-GAAP With range million for be a to open line $XX.X expect that, We to questions. expenses operating of $XX.X will million. I now

Operator

Instructions] comes question [Operator Company. from of Our you. Thank Oppenheimer Colin the line & with first Rusch

now is open. line Your

Colin Rusch

and per and what's And that guys. home could of so actually then is we software Ensemble? break service hardware and between How much that revenue? Can storage it down down XX,XXX you Thanks much, break type opportunity. energy what's

Badri Kothandaraman

microinverter, Yes, microinverter average so ship home. a Cable, a usually system the Envoy, Combiner there $XXX. that XX microinverters the the today are roughly per Colin, we on includes the is Box, and This

a go system storage, home. talking switch we system to an about Ensemble, are So addition management we automatic $X,XXX about is home makes that -- now usual Combiner talking it about by about and additional When the transfer to we in per powered are we talking microinverter software. and are energy then our Box,

which software IoT like but agnostic rolled it, we having for available cloud. thinking the storage think it, from say, you software $X,XXX, example, anything will XX we let's system, the because about ATS. will then, are be can are which you eight the are capability to scratching grid there, component, as if surface yearly hour via So software, about a for the thinking be And kilowatt service fee are the our through of storage plus still out be the we even right, the that only system

we it's So get you're at expect right, least more. $XX,XXX, to and

Colin Rusch

obviously guys start expect this, the of the or in quarters serve you on over with working you just are ability we can flowing of that your the but have think that front how in the issues customers? several And shortage, to opportunity the actually your through through then, to Okay. component terms you you revenue on next

Badri Kothandaraman

transistors. on Infineon, Semiconductor, are Toshiba, XXX-volt The handful. just These usual I'm the make. They this, & the usually are shortage On mean, who suspects. it complicated who at transistors. devices are to these it, suppliers talking are make general a supply basically Alpha high-voltage and stepping about is I Omega STMicroelectronics, make the back are They Semi, the looking the people

our homework. done have We

AVL charging. suppliers those demand on to that, facing are unprecedented our five Despite today. have of EV We guys three due these

have. to XXXX. a So this six us on exceeds is creating for supply ago. eight their to line the that that I months capacity, create January of demand they We in recognized and coming problem money, about line board dedicated invested

supply 'XX. problems my majority be QX expect in I gone So of to of

Colin Rusch

hop Okay. I'll queue. Thanks much, into guys. so

Badri Kothandaraman

thank right, you. All

Operator

you. Thank

Our of Brad from Meikle Williams line Trading. next comes question with the

line is Your now open.

Brad Meikle

question. for thanks guys, Hey, the

guess the line how on and the the you capacity about So brining just power are, or follow-up could talk I broad -- you're that line what MOFSET more exclusively you're bringing on. power the on to Thanks. is shortages

Badri Kothandaraman

you early this now. away to November of we I color, give at to $XX the Yes, QX, point booked is in demand basically walked you. a we million mean, QX I it only and fully are that guidance from in time, And right gave for

from supply is the our demand obviously end. So outstripping

to the switching say supplier, we our can but and of with supplier much terms have In investment that as I'm too to given details, I are preferred that going is supplier, basically capacity. to the assured and a not source reliable you all of they we expect expect that reputed, other need. sources, our very than two are demand know, we They we the very more existing -- have available between supplier, us and to that provide

I to in So problem gone QX expect of 'XX. the be

Brad Meikle

Okay. elaborate generally as whether memory primarily? really power shortage components -- within or the terms passive specialty the Could is it's in well capacitors, at industry you all of it MOFSETs,

Badri Kothandaraman

and behind and Yes. I the the months coming I is through said, that, think six mean, power problems XXX is and in to the capacity MOFSETs this resolve esoteric knows at suppliers we I little Yes, shortage. right soon. by an time, made there and put shortage spot ago, only our but device. now. couple have more believe is by biggest onboard a bit on of volts five have that's to able the be far by should the like the but It's of said, us not MLCCs, been everybody eight margins high-voltage is that I complex, as we MLCCs, we right we look, It's percent, pretty. said, Eric but buys. the FET there actions gross therefore It are transistor a affects getting with It by what the are

Brad Meikle

about separate for and topic, what's being and Okay, thanks. opportunities quarter talk could the looking you sold you revenue first Thanks. XXXX out QX, share into generally On that visibility growth a thoughts on some at at? this your can your point, you're

Badri Kothandaraman

to that we about million customers Well, is is about other IQX going vectors the growth that but know, on well. robust a sheet is than now, and and our always normally The -- turning is modules. high-power on, Solar we're profitable is in high we our so give million not out, products relationships On cake are Ensemble. some to introducing the in transaction, to you SunPower you $XX more $XX I'll complicated. give course don't you Ensemble enabling have XXXX, are they know four know, annualized that AC of guidance on back yes, add 'XX. the balance it, the already for Then top margin general, of color gross of quarter for catching very second-half and product as on are icing especially, on, development Storage is new come high-performance is very you to and biggest we us, --

the manifold, be predict per but right timelines we by revenue exact now, we going are hardly and you're which to Enphase. that track can for can increase You are home going is there, on transformational to get, if our

Brad Meikle

sold Can in quarter? grow second of the And visibility quarter think part shift amount the are And already? first Do base What's problem Thanks. just in your out the the on gets first the better was you quarter? supply quarter. that the first into you your around you that?

Badri Kothandaraman

booked QX is but we Yes, not our provide more feel balance going they I go customers coming fully said, what of for am the already is said, sheet good, to 'XX, like still only back, like two to order, November, I customers beginning I default. this strong. I'm QX what to are guidance going months I have are if demand robust, Q, and I is really by of for mean,

good So we QX. feel about

Brad Meikle

indicate range time. -- surveys -- and of lot appropriate are it's reserves, we've the compared that heard as reports, you of of and and installers, had rates you and reserves drives I you're think this question We've on whether for thank the are. created And discussions Badri. failure the SolarEdge a in do checks % speculation X.X know, XX% how in Thanks, last we warranty XX% just is with a with, the to so a range, and warranty lot lot

you what so we us, more back-in So, failure to can can are with there your precisely? numbers share is where a point that those rates

Badri Kothandaraman

We talk are talking be not about going about competition, but to I'll our strategy.

put is something week, Corrective at that corrective that in process reacts put the quality interim in is, and is Enphase. to Cause in the what Action the permanent priority. my the root That's cause, from containment at XX and which upon do so you it And at number actions quality you you company, Our actions, called actions, one every culture learned you you quality everybody last change corrective place, Root I Methodology. then five as in is what the you and company way yourself years, here then you look to look over based of is same your we are review trying that the failures business whys, previous ask

XXX I'm is to my target So to if PPM. PPM math. doing the is X.XX%, XXX personally get

and PPM, to night to we target. are working achieve to So that get target, day is XXX that and my

leader told a place have great in you, we problems. cause We corrective the root action to engage what fix and I in in like quality,

Brad Meikle

Excellent, thank you.

Badri Kothandaraman

Brad. Yes, thank you,

Operator

Thank you.

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

line Your now open. is

Eric Stine

the just wider curious, than range revenue Was is so the there factors and place guide, shortages, is on some that $XX mean all everyone. or component in other wondering it normal, that are are guidance, million that just range? the -- a it's driving Hi, I

Badri Kothandaraman

because this you, like short supply. I of situation our told are That's a is a we I bit what supply little question. did good deliberately

good getting are We day. news every

some news get we bad Sometimes everyday.

to guide $XX and right $XX felt to million you, the range range that should was we thought I for we million. So

Eric Stine

above little math, quick midpoint Okay. little doing get on revenues to And you then, in like just a terms the bit it a XX-XX-XX, the or bit would looks -- of the some mean of the for revenue that the line, range? talk that can below of to that takes the get I about op just high-end and XX% you you puts margins. level

Badri Kothandaraman

thinking right. XX-XX-XX, you're the and and we That's in guidance the exactly too, I want midpoint OpEx gets the that range, around midpoint XX.X mean margin guidance, it you I the about of the know, way you guys to is to is XX-XX-XX are that's of gross think gross us our by -- about sometimes target margin. model, undershoot sticking Then there, go should our guidance that's and to. overshoot sometimes you we margin, but we'll sometimes are operating really the gross we'll maybe we model. That's how what

of OpEx, OpEx, restructuring does our we mean, company what right. achieve example, the terms In to for XX% are that

are As come balance sheet; strong back us. us, to customers we have back coming to a customers

to Zealand for selected of want starting New OpEx. grow careful mean, add in execution control the at India the want right of still will right majority to terms which and is we a We're in to Zealand made have invest I are to talent and we line. and be OpEx, New starting people in why We base Ensemble. the don't shifting we we massive costs, to teams have strategic us We places, are -- therefore, India very to while top be will controlling on decision the the U.S.,

model we why right that's the OpEx us. are XX% So confident is for long-term that model

XX-XX-XX. you to explains that So

Eric Stine

Yes.

well, the quarter, as the something expect get that. you for for then milestone amount and is to missed that clarify, one, just that last Eric, that just a that was, third payment I the thanks then to fourth? third it, Okay, milestone in payment And in the

Eric Branderiz

will Yes, and XXXk. it be

Eric Stine

I'm Okay. -- And what what was was the XQ sorry; number?

Eric Branderiz

X.X. XQ, The

Eric Stine

you. thank Okay,

Eric Branderiz

welcome. You're

Operator

Thank you.

Partners. next comes the Our Shen ROTH Philip from of question line Capital with

now Your line is open.

Philip Shen

questions. for Thanks everyone. the Hi,

pricing how So, you to talk how raise higher then first you in U.S, the price do expect in QX? much much pricing -- pricing. one and be is passing Can on in much about is may you QX how on

Badri Kothandaraman

will September regarding while communicated of tariffs, with that on XXX basically, effective tariff, and know of what a portion a we is Phil, the we our XX% pass will had that XX, customers we you to portion we So, absorb that. tariffs the

to QX. not. to that so about or price roughly whether X% is customers yet tariff to actually is QX, So, don't going increases equal, in visibility tariff X% a XX% have we the average be

it in will event, So, the our very be is XX%, similar. strategy

our share will cost increases We the customers. with

Philip Shen

degree you great. in the what sense of relates QX back-half is kind of QX? ACM decently, also this of share SunPower in -- how And revenue QX? ACM ramping and what year, contribution can to SunPower see volumes is be as but very it volume possible Okay, QX Thanks. made volume, you next could the clear might to it much then, what the My be in and/or be year, your for it in might up mix to

Badri Kothandaraman

Yes, in to are QX starting ramp. we

We expect QX, a be QX most in really get will expect should I QX. in volume to shipments it complete and by we ramp. of nice the ramp QX.

Philip Shen

QX to we on you the maybe the guidance, the price are pricing really you raised Badri. roughly you to do cadence you and in Okay, about increases, the upside event like now? great. if suffice that that with in be with we go And helpful. know tariff XX% degree by the would about, might can't even line in way then, I but some say, that a as in it quarter be talked Thanks, have the you relates and or talk event margins to there but Is -- that can a margin provide XXX, expect of experiencing throughout even what as you 'XX, look

Badri Kothandaraman

Yes.

you, Okay, thank Phil.

making lot of you we color. gross In don't to QX, on we're give a in some progress general, margins margin. our will gross guide I but So

on We costs day are night. working and

working on are the We architectural innovation.

We are working on accessories, dropping out overhead.

gross better. is In margin higher-performance products, we naturally to addition, higher-power as our transition

we is comes feel actually XXX, I good said, gross what sure margins this And not like we about I'm So have next. QX. XXX, solar have we in the industry, what

but really So about good gross are we obviously we margins. feel cautious,

Philip Shen

be based might in near-term, good. us expect partner, it, of them, as from in, a last little give you That's Can quarter. months come to commercial information be the that. And on could partner business this more are bit this Okay, well? be that terms opportunities do you this there can next the IQX, similar about partner? finally, you it partner more in know that color. them year six When you then call great could that in and for I share one then Thanks. beyond what to to supportive country introduced

Badri Kothandaraman

we while partner trials we all details, the the product, the outside and is many Right, off-grid U.S., are give And currently version opportunities that the field our one. safety cannot is have with doing completed certifications. too

yes, bullish opportunities, a ramp we day Off-grid solar work too, my expect where as game-changer for a hometown, will In for are in my I a especially is it those there mean, summer. city, about we So where XXXX, yes, opportunities in like the as help. regarding power are I first-half from. said. can and with am well. regions in mean other I to hours other eight And in with storage India the need no of do opportunities, be we I the granted, there really there. big actually places the are And partner

Philip Shen

or talking can terms in follow-up are then, one last that, on Great. the we first-half the you that tens quantify of ramp in about millions millions? year, single way, of in And next any

Badri Kothandaraman

yet, no. cannot I it quantify Phil,

Philip Shen

on. the it pass all Okay, Badri. great. for Thanks color, I'll

Badri Kothandaraman

you. thank Yes,

Operator

Thank you.

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

now open. is Your line

Carter Driscoll

Good afternoon, gentlemen.

satisfy at so, think all customers And So, were maybe that be that out? with satisfied of mix that to of Could not or the have competitors? XX if you qualify regionally to was it -- you you been opportunity either went you by million couldn't if that a then could lost able the do type? think pushed quarter, this

Badri Kothandaraman

million well to they both in X the going with going QX. nowhere, $XX are tail are the and Tier spread as They're was us, between mean, service long [ph] stick customers. going them to I we Yes, as evenly

Carter Driscoll

Okay.

Flex -- would Okay, kind excellent. you an Can quantify the you to mean your able impact in talk mitigation about that XQ would of XQ to in incremental anticipate could and be if tariff Flex add? pricing response or be lower you prices strategy and relative to I having up margin in your running, XQ, do from

Badri Kothandaraman

look in capital Mexico. board We've North and expect to already your go XX%. of environment on answer In customers. XX% put expect Well, pricing, I American the from invested that. point make capacity of going capital Flex. the on to expect regarding the of Flex is in QX, QX right a that 'XX. we've our QX, first, we capacity we we're the additional at the to In will already we for demand XX% service question -- question decision that on to at in the the will come time Basically pricing With terms for we to

Carter Driscoll

position financial an as more moving were characterize guess Okay. couple Would talked just that years a or Tier you longer-term a stronger installers still ago when be relationships would have I was the it X those in a about that transactional. you relationship, with them, towards not that or more solidified relationships statement is of or you unfolding of any process? achieved a fair now you

Badri Kothandaraman

is for solution, clear work Tier Solar It such form. the proposition, storage the is started in and say and would a provides reason value progress game-changer get X else an solar we is difficult grid solution, and product. in Ensemble have a love agnostic work what Ensemble the it's anybody. the and elegant say, AC discussions I Storage to I progress, the from The in that is complete anybody marketplace,

and the very discussions announce are Xs with Tier we are So ready. more progressing well, we'll when

Carter Driscoll

they're this you two or two, similar an cobble anyone something close trying to anywhere maybe level, integrated just quarter not quick ones, if mean, or I see together? with point, something to Ensemble offering but next to even Okay. at

Raghu Belur

This how building like custom around XX-nanometer it's is is heavy said built ARM is ASICs. look you those ASIC, on of all are are for we one embedded we but architecturally -- leveraging I which if and sure, technology semiconductors, it a and of our each microinverter-based, a an Raghu. Moore's Law, We cannot say core in -- at with

computations, AC bus uses it's at that it rate. performs and very AC extremely this -- high very manages a architecture high-speed this So, marketplace complex or an

the be to challenging don't but inverters. it's for we architecturally, string So think going know, I

say gives to the capabilities we release architecture quite unique, the wanted built and unique is as think I we'll and However, marketplace, software, just Ensemble that and know it's think us around technology. we're get that very the I some that out more. to leveraging into I semis product our

Carter Driscoll

to spend get some S&M tape-outs Okay. there's Thank noticeable then of just geographies one, to line. you, what to that product you or Raghu. you're going or know, product in Ensemble? for different incremental just is different any -- And trying last rollout get of because early Just customers, be sense a might OpEx

Badri Kothandaraman

sales our a general, Ensemble, It's introduce line, as is marketing is hitters heavy are we we Well, as of we in sell. more true grow sell. that complicated because more it general, in solution more top products of like a board, technical across and adding and the

are heavy in model incremental OpEx will you still to expect hitters think we marketing continue XX%. I a but to need adding side, the we So there. at about sales long-term add and talent

Carter Driscoll

Excellent. Yes.

Okay, I on. stop Thanks, I'll gentlemen. think

Operator

Our line now of Dayal, line open. Amit next is H.C. Amit from Wainwright. question the with comes Dayal your

line? on your line If question comes the Raymond Our of please un-mute with can mute, you Pavel from line your James. is Molchanov next

open. now is line Your

Pavel Molchanov

my for taking Thanks question, guys.

there are of the You rounds or yet Is just processed referenced the is process? granted. what been know, been has something SunPower and the understanding has it you been impeding has exemption of, there substantive to-date, some there the XXX, exemptions sense administrative that why be that my additional slowness any not for to is yours is reason have

Badri Kothandaraman

know an this, have don't Pavel, don't We we answer. so

Pavel Molchanov

Okay. Any when its this guidance will you're or process course? when on anticipating being run you're told

Badri Kothandaraman

the mean have way I factories the expecting is something, we in partners engaging end, by other -- building actually Well, problem the we on the have but this [ph] U.S. sidestepping talked are

in big So we are the deal it's us for and think sidestepping not problem, long-term. I a this

Pavel Molchanov

you. I Okay, hear

a quick battery. one me the about Let ask

those the I think solution selling selling With this lessons the forward? of now. to first-generation slowly, having sales product about You've integrated gleaned been two you've I that learnings that for going fairly what battery imagine kind influence going about go moved or are you're years how will

Badri Kothandaraman

it's simple. Yes, pretty

date well target have been over as shipped X.X. as ACB till markets The have Australia. XX megawatt on main We the Europe hours

let can It good, expect installation. It easily. tell the me me high the you is you highly quality and let So very be also it's modeler. an can scaled Enphase very easy system, so

a to buy done. want you If build it X together, have those, of you kilowatt you're system, string three hour to

doesn't two. other That's it pricing, a we're are one. quite we On system Number do being add told hand, value-based high. that One is support is that third negatives two are of I'll is the And backup. low. one; the our although prices the capacity

So modularity kilowatt blocks. hour of while and right doing hour building X.X still and we're now. keeping we're these solving we what kilowatt That's problems, all are basically XX.X system hour the kilowatt system, building of XX

Pavel Molchanov

I guys. right, All appreciate the color,

Badri Kothandaraman

Thank you.

Operator

for Instructions] [Operator question-and-answer concludes would to now Kothandaraman you. our remarks. the Thank like turn you. Thank back This Badri to closing session. I call

Badri Kothandaraman

our us you joining for forward on today look continued support you thank for Enphase. of with next to quarter. your and again I speaking Hi, call

Operator

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

all great day. disconnect. have may Everyone a You

Enphase Energy (ENPH) 6 Nov 182018 Q3 Earnings call transcript