ENPH - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Enphase Energy First Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] And as a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference Ms. Carrabino. Christina

ma'am. begin, may You

Christina Carrabino

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

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

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

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

Badri Kothandaraman

and afternoon Quarter for was reported The We meeting from million. customers to solid biggest The Results. boat. XXXX another had revenue was shortages. First component discuss of all we Financial of our in quarter, of thanks the joining today strong Good $XXX.X us challenge the demand demand across our

just component our provide later as We I are charges. for mitigate will update we QX XXXX plans an to fully-booked on call this for XXXX. QX were in

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

in first due exited Our make our interest service the accrued impacted by expedite term high non-GAAP basis to points customers The our to $XX.X repaying shipments We gross cash loan a quarter to fees that bearing secure were air plus was approximately $XX.X with balance we negatively component of chose after and in fees. related interest million, the to XXX shortages. of better. million of senior form margin fees expedite order

flow cash and the strategy. are customers free QX. and business- doing of we of since constitute ease for half the that adjusted focus in our us second of our us. million is discussed experience service XXXX cornerstones $XX.X important reported the we perceive of how An customer Quality together addition, In area have customer of

During online center metrics QX, our support. customer and made call several in we've improvements

of quality We experience we XX% have recommend has Program X,XXX recently over to program. the used a call Upgrade enabled the surveys or by our installers Service-on-the-Go over improved or -- that commitment first appreciate resolution measure mobile metric of support tool year, claims The a announced on metric joined over from feedback past do net for metric via early the customer the our program to microinverters. be much Enphase colleague. and partners example, their our customer legacy through homeowners we friend service who our to adapters while customers to how For customer is key handled now our on approximately self-service NPS. has from XX% This devices. likely to solar program based calculated support promoter so and represents or a is This score Enphase will

quarter North of Our in QX approximately the in compared approximately was XX% NPS XXXX. America in to XX% fourth

a Our worldwide or fourth of target quarter NPS of achieve higher XXXX. in XX% is to the

accessories. impacting tariffs. to XXXX, Turning XX% microinverters in and of September Enphase XXX The effective tariffs became

said with have before, increases As the we our customers. cost shared we

continuing on are Flex our the to QX manufacturing in Mexico expanding by XXXX. in tariff XXX execute starting with mitigate We our of to plans agreement

are and this our Mexico to from plan shipping volume Flex track with We the quarter. expect start production on factory

to turning Now, our regions.

respectively. for U.S. international strong Our XX% was and demand Customer mix was and regions QX in the XX% first quarter. all in

supply component were shortages. However, regions all impacted by also

region result, allocate the first each carefully supply a during to we continued to As quarter.

down quarter been and in first to expand and region pleased family component XXS XX% U.S. up shipments first able our Our up are with was up well-received X we channel the U.S. the has we but base QX customer during demand shortages, the year-on-year. year-on-year. inventory. customer in revenue to in Europe's meet by quarter. but XX% revenue see revenue impacted IQ product X% was were included also our SunPower. of sequentially In sequentially, The to Europe, growth IQ microinverters our X% was

in small XX% to and target help In Europe the as has in supply sequentially quarter year-on-year. channel expansion be will in was particularly region replenish systems. XX% demand was In experienced XX% inventory We the of first America, North down in for corrected reflected our Both well-received service in revenue quarter. XXXX Mexico as expect region the the and continue the our growth We sequential America up to and We're inventory ITC first our we with important on are year-on-year. Mexico revenue their and markets region. that by channel customers for Latin opportunities. during been growth and up previously-discussed QX Enphase. Rico quarter region about very . increasing growth optimal for the a the sequentially increases our Puerto continues in is XX% the for and APAC, X Safe optimistic IQ the Harbor also opportunities the working We steady be few challenges up

call. to these to and opportunities. to strategy more we While we with early it's ensure our next have is place capacity still we Nevertheless, yet, the are not volume support on forecast accurate do have information earnings in the prepared expect right

about to good is time Now the talk supply.

in for we second expect and term of most as the power contracts address as supply, transistors signed half early the As this long high previously this year. voltage mentioned, in of shortages, order to additional some of and starting component quarter it it

our we also As XXXX. to reduce help of us weeks. a closer This internal quarter lead result, a X-X to capacity have of expect fourth approximately our target should million times the X in microinverter microinverters of

top Now, initiatives. talk about let's growth our line

for We line calls. about top have have levers growth talked we which in profitable four the previous

one products; Ensemble third first the the AC IQ the Solar second modules one high-performance is high-power and technology. and one The is expansion; is and one Storage fourth is regional X

of our profitable of the end IQ our IQ microinverter expansion. top QX. from for nearly is Approximately growth QX transition all were in to our microinverters' X shipments goal QX, line XX% up to The of XX% shipments first is by complete X X, of and lever IQ regional in the

high lever line is second high products. release growth top The performance profitable for to power new and

of series IQ expected XX-cell into IQ modules. general microinverters integrate They're and for North microinverter to are for first microinverters microinverters new follow XA targeted that XA peak efficiency powerful half previously XX%. modules whose space SunPower modules of an family will much during XA As XX-cell modules up is the of date of availability to solar high as of particularly tremendous the A announced, in IQ quarter. generic those roofs product, power is highest in power We we high the power the with second The IQ as XAS pairing XXX-watt our The XXXX. DC. released AC IQ XA constrained. significant to of to producing for homeowners, value The a AC XXX-watt our shipped efficiency their XAS volumes America IQ capable average of at combination CEC creates of is NGT

line SunPower from XXS in The to is XXS AC for the the began compared We growth third they generation as modules. to to profitable top transition fourth IQ SunPower had microinverters microinverters first worked to our ramping. smooth IQ with lever quarter their prior product We of fewer shipments quarter. ensure

As previously announced, expect and quarter of throughout the XXXX. in second the an acceleration ramp we

highly the reliable In became with XXXX. available XX addition, Panasonic Panasonic's our HIT microinverters. These Enphase’s panels microinverters AC with IQ the in the of March integrated solar combine modules efficiency of NXXXE modules IQ XXS

adapted in on solution is Enphase AC X; with with ramping XXXX, and also “always” energy accompanied Storage X.X gateway; with U.S. such and critical driver from are by Solar kilowatt which microinverter by The capacities XX.X of other IQ is which is Enlighten, with Since module progress and communication of partners Solaria Automatic Enphase We XX modules. kilowatt AC about release agnostic the the Envoy for grid the Encharge is kilowatt their Cloud Ensemble date. this Transfer battery our control which hour the have storage hour; component The making Switch steady partners has installers in generation energy as and and fourth top in most module as hour, which software. our components: been October consists box our growth XXX four line the final the profitable of is the technology. Ensemble of the and achieved combiner IoT the modules

in plan quarter, last discussed we manner. As Ensemble phased a introduce to

Ensemble Ensemble allows and to streamline grid Switch the as well. be installs. be with feature the from scalability installations, focused the designed enabled modular quarter most release a to to North be together X.X modularity cells, Enphase kilowatt storage which energy the of hour is And and grid part X communications, packaged while a new America. systems, is agnostic Transfer which grid of home differentiating the lithium a kilowatt in and as microinverter; single called key hour for expect the X.X X importantly, function. existing both the IQ of residential is by The event flexibility in IQ on to system, allows for X.X is our solution XXXX, Residential battery designed IQ Ensemble enclosure. solution. LFP, compatible of a management use Encharge solution the enabling energy all software is X.X supply Enpower, of our and the is that The ion solution which failure, grid exclusively in our Encharge in phosphate storage fourth PV isolated to battery helping Automatic X.X the X a consists chain agnostic We

to PV will expect new next Ensemble hardware generation follow We over capabilities. after The a Enpower of and will managing which software have capability and and consumption with software installations. fine-grained be the in Enpower X.X of enhanced IQ release shortly expected generations enable is to X.X hardware time Ensemble will of X.X of part manner. X new

is goal our Our every to new providing in to Ensemble additional customers and partners continue value release.

will continue update quarterly you basis. a We on to

quarter. from Ensemble-based Eric. per for to to potential and the We review turn experience while There that, delay is to second close per focused home energy demand, payment value. chain delivering In With a our approximately of innovation Eric priority receive quarter to systems. final is the product the the the leveraging the over focus $XXX,XXX further and our $X,XXX customer our $XX,XXX management shareholder solution home expand revenue to to customer increase quarter-on-quarter supply the here, of near-term, right. from quarter. providing in top call has on software ducts. IQ milestone second pure expect over additional to changes his increase off-grid profitability meet experience. the X we get are We expect summary, optimize approximately of are In very partner our our the ramp to in mainly production creating partner I our now microinverter by will to and a to financial In home longer-term, superior been final the to one on the involving our requirements

Eric Branderiz

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

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

XX% of financial X% section the was of GAAP of shipped quarter. represented increase than the which shipments. and microinverters reconciliations Even posted we provided million an earnings increase compared first XXXX an non-GAAP QX of margin report have first be shipped of XX gross our more increase quarter. can XXX in pleased quarter of megawatts the We X QX of inception, the microinverters million XXXX to quarter negatively of IQ XX% X. and quarter Non-GAAP and to also X XX% released sequentially fees these increase $XXX.X XX% million, in of continued Total some found that of represented XXX-basis shipped of the am quarter year-over-year. XXXX, shortages we expedite IQ with website. shared microinverters, ago QX was for revenue XXXX. non-GAAP approximately measures XX.X% in Investor of now since in million though and expenses our I was the the globally. of XX% quarter margin of for $XX.X first We of the XXXX today, Relations to the fourth XX.X% points. of from impact have XXX,XXX approximately for DC in operating first the sequentially megawatts to approximately megawatts to were million IQ an our first compared The gross approximately Both year an our $XX.X by partners, which $XX.X component for Non-GAAP

the $X.XX first compared million This to the share first non-GAAP of in diluted $X.X compared in resulted ago QX $X.XX of basis, share diluted $X.XX the the and of year intangible loss loss and of the quarter income improvement in into of $X.X fourth XXXX, mentioned in net On year basic $XXX,XXX $XXX,XXX in for basis, leadership. $X.X first higher the operational QX $XXX,XXX audit per XXXX. fourth the in income of quarter incurred quarter quarter of to basis, additional a compensation, than compared ago continued in or XXXX. for earnings and million quarter $XX.X XXXX, attestation of of of GAAP included as in compared quarter compared in and in for in assets per share our was amortization expected in The first quarter a XXXX of income share I first operating GAAP we first basic than first QX quarter a diluted of the per in in $XX.X XXXX. QX This of $X quarter. was million a the the the in quarter, last acquired quarter million share and expenses XXXX. million normal share was quarter $X.X higher continued was earnings GAAP On and first to the $X.XX million income As operating of and of million XXXX $XX.X quarter expenses earnings for basic was our earnings GAAP internal in to the stock-based $X.XX quarter. net per XXXX. earnings SOX $X.X advisory per of and expense. auditor expenses first operations of year XXXX diluted first $XX.X to result, basic These the X.XX $XXX,XXX XXXX share and were improve operating per of of million is million XXXX. earnings QX a quarter $X.X the $X.X fees. million expenses from consulting excellence and of million continued the compared for and of This XXXX earnings restructuring non-GAAP income in per in of of On and $X.XX resulted reflective first a operations from product million to plus of

the in net was we GAAP happy quarter second that profitability. are that company's history achieved to the We report this

XX and days quarter. on XX quarter the million March year We was quarter hand in $XX.X to the sheet, and million inventory year in down days turning days compared down inventory of $XX.X fourth below QX XXXX, the Now $XX also in balance first from XXXX ago the significantly XX of days in of at XX ended of target as our to quarter. in and ago the million XX,

due first QX. remain cash balance million compared of total management reduction million our most of to in shortages, by of one constrained We demand key exited quarter of XXXX with inventory the inventory Although to continues the a cash with high initiatives. component was $XX.X $XXX.X management

discussed, accrued of quarter cash paid We fees. flow interest amount secured cash As million adjusted million previously million in in $XX.X bearing we for free hour included plus Partners. and $XX.X in senior generated $XX.X Capital Tennenbaum full The with high-interest the approximately repayment term principal XXXX. first from operations loan flow and of a

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

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

non-GAAP impact we to of XX%. to our expedite XXX-basis Note includes margins, due XXX to and fees, range components QX points gross of that a within from GAAP margin shortages. gross to Turning expect guidance resulting XX% margin be to negative approximately a

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

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

Operator

[Operator Capital Partners. move from the right, we'll next with question. Instructions] first Shen Our Philip comes All onto ROTH question

question Our Colin comes next from of Rusch Oppenheimer.

Colin Rusch

see going Can or grow guys. little here? seeing that to talk expecting some sales flat about leverage revisit additional and you the operating expenses you you we your expect operating leverage and model hold Thanks what can so forward? much Are as you're a bit that here XX-XX-XX

Eric Branderiz

will in ago, half Right? almost leverage So, our a we manifested XX-XX-XX baseline in business. for two and using, be that years framework is that our overtime. of are the which the the remains So, ago, a place operating year framework lounge operating we

making of and R&D OpEx what on revenue we are our continue as marketing future products the guidance, see that You we areas say part I'll investment midpoint of that do, the XX% such is that about some and QX associated midpoint, we of see development drive. in the sales on already with can the for it's looking which leverage. achieving by and the critical basically of at investments you of in which

Colin Rusch

seeing you at interesting terms talk a the volume? in around, And your cost movements then have we're a around of on LFP there. you then little pricing? as expecting sales into battery movement as on some that's just that much about expectations little well higher go can moving in bit are much How what And product, supply, acquiring bit visibility costs you terms certainly Okay. those move the a this point? structure as into forward and you And for of how

Badri Kothandaraman

not battery X Colin, the little our In the pricing, of guys. market for system if per ranging market a kilowatt hours the long guys, than I'll is early, anywhere some the I Nordic pricing for for kilowatt look per guys $X,XXX from general, hour share day bit $XXX it's big stats. at market our pricing, current a the but a take usually to tier more pricing,

us hour have already pricing cost we will again, With along meaning given partnered have battery sales, cells, has market going but and to the not very supplier We the with the high the extremely break X.X appropriately the competitive quality. of kilowatt you are the to we X.X asked, account. cost into structure with buying it regarding obviously taking one price a battery out dynamics of we who from ACB

supplier the very a supply an great high-quality chain. process with with We signing are MSA another in of

to capacity in expect concerned costs as us put will both position far good a as very two those are be competitive. and we and So,

Operator

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

Eric Stine

of know out how you're Just wondering but related versus and willing what if component if the year, impact we that I'm at, as SunPower on the to I'm obviously this don't a and was maybe of to line I is volumes layer underlying your top curious -- that. if break just back I expectations. this business I specifically, is that half of getting then SunPower strong of top quarter strength trending we're the your very major guess SunPower to and or get a the into going of the

Badri Kothandaraman

is extremely customer. very The going SunPower transition for important well us. They're

serve to will whatever it We do well. them takes

less to is numbers But SunPower is this when to Enphase therefore, course, strength basically going bit we 'XX the seeing made their mean, forward, if them other no yes, But or extraordinary little are in of SunPower we so ship with the there's from that to quarter. and as said with what And we're the ramping with position we we up start we right. Of had an to all thinking ensure demand we customers. the it in should even that work customers the inventory of of because as inventories before, reasons, if we better. lower so business ramping change I And the product, QX had material well. therefore,

Eric Stine

you're obviously, bit a And it. making of got module customers. quite Okay, progress AC other with

partners Just of curious you've current in or whether mean -- I response module from partners number the trends what of seeing the it's AC rest new got because you're today. to driving a partners, that's

Badri Kothandaraman

started we So AC in and AC LG late the the module was partner. XXXX module with first

since thankful We then to modules. And AC for are lot we've learned a then on them that.

to or in SunPower. microinverters for AC modules have shipping AC We modules now only the started

time, of able innovation we are shipping field we modules, training. Panasonic, in on we where we we certain are improve to are factory. to that basically AC the we is And a logistics, quality, microinverters mean, because improve the able in We installation AC reduce modules on cornerstone of to shipping activity the are to that improve [ph]; absorb on for a I Solaria our

to screen. back AC it So difficult it to have this installers, value. find offers extraordinary The whoever converted obviously modules go

AC becoming is one steady very it's it. it's It's -- on it work continuing are but ramp heavily and quarter not that we slow important, to growth. in to So, is module going

to with well. also partners APAC introduce few are we in a example, working as AC working vendors announce of with ready are in are we a modules, will Europe in very we For and couple order when key we modules

Eric Stine

Did mention looks by one last this. that was I the if on what like and you XQ give you missed the QX? me, don't I number and constrained did for or number know and Maybe components

Badri Kothandaraman

No, we have we by. constrained breaking the no were out number No.

Operator

Our Wainwright. from HC Amit comes question Dayal next with

Amit Dayal

the the guidance. quarter on guys strong and Congratulations,

partner you're Just customer? driving is just the year, maybe seeing, well you your Latin I perspective, of the I tied a doing market or in but one U.S. you're strength this share know taking on Are other Could some you players? the... this from mean, any America to geography what's from strength? and give some color

Badri Kothandaraman

in people, XX great of hurting balance months P&L The lot Actually, a the hard done very months of a back work sheet page place. not the was was I different corner. have the with in last was in a we shape. in basically think XX

Our We're make sheet to is money. very starting balance strong now.

X you weight best has, the at And lot times a the simpler know difficult coming even hasn't the our fantastic of of product. most during lot importantly in stopped number business of in terms cable introduced is innovation who us the power, that is a were components product do and of that time our in addition, most with customers, of a X. kind nervous X IQ the back. of and customers the we is cable. IQ So, class to kind X are now IQ IQ And

cause root the been really has innovation here. product we are why on So

coming cost of lot It's of probably customers So, with coupled the great coming a said customer that is that, having customers. a demand this service is from? of back. The strong from with And where quality, long-tail combined coming lot a balance low demand broad-based. is great a sheet,

seeing a tier In that's of bunch addition, well we up. are X cropping

some important is ramping, relationship of that modules Ensemble Of the about know course, growth. I AC thought, vectors, the you revenue are us. for Those and also are of

Amit Dayal

Understood. it Are trying the well? little bit. But play just the I'm following the look going further of the -- as strength down in you to you position to second year half don't line level a fourth with this potentially looks you in visibility, seeing I out know if etcetera have are maybe coming the it sequentially. probably you in but to a like that quarter Ensemble or of down sequentially share continue that can in

Badri Kothandaraman

Amit good. the too second feel guidance early, It's the Yes. or but talk about we to half,

lot happening. the with to the quarter a things have on residential of focus storage We released market. the get is fourth positive Ensemble in going

very to excited take that. quarter one But are are now. We it at about time we going a

Amit Dayal

Just coming online, the or this maybe to the expedite more? out little now Infineon should fees for now is away continue going us we last one this one with expect playing a bit

Badri Kothandaraman

In of long-term, in because see. anything to expedite, some the it of egregious the of signed a is it's QX. which part is bit this us second to to starting for fact, X%, maybe steady we half next the Infineon will X% always away. to should probably with go little a latter in needs the away year, or which early you stream again, we X% that supply expect And the with, of is etc., in And year instrumental contract but Infineon that X% neighbor a going go is only

expedite some always. expect of levels we So,

Operator

Capital. Our next question comes from Philip Shen ROTH with

Philip Shen

tariffs a percentage you've do what have you technical strength from for and forward, but now. through the Thanks. of does as go cell to phone. this April is what's just again. we've apologies But pricing the What lack that with some in the try question the my me Let's hear you that you expect X. trend we competitor of for independent that may business, to? want U.S. -- X% talked this, entrance that's the okay? of apologies have on I with general then if And of how pricing, sincere business just do confirm you first Oh, that looking the outlook to by on for apply already the you pricing year? raised difficulties Can heard guys prices about

Badri Kothandaraman

we X, in pricing time, we true. it pricing see the And April Yes, the at We take are to pricing like we now see correct North is but going one raise on by it sealed I America. I mean regarding quarter now. said, With right trends, X% flat. a what did be pricing to right

Philip Shen

half, you're guidance you And for strokes. wondering could I was broad-brush back providing if I the some provide know not but

specifically, about being how the be QX. perhaps, indication some talk booked talked what you provide about for So, about cadence be? booked much fully QX and Can might QX QX might you of

Badri Kothandaraman

of Historically, I'll AC cannot QX the typically. QX, we are is thing our to SunPower and numbers the you strength we long-day is anything very usually you told of and in can are spot having you lot unfortunately, the modules so mean our the Amit. know, that up good in change. X government QX business due business. the of business in had with a relationship Phil, our as the said and I break good. know conditions same I tier QX kind of had at business, the solar A that, But kind terms but the say for know for

it good. So, we one at time, take quarter are feel to going we a but

Philip Shen

by at supply, quarter much but were QX your QX are looking in for of vast could a facility? up Mexico how there started U.S. do you demand of know the maybe addressed I we majority? you ramping your As we looking be XX%? think Are at

Badri Kothandaraman

a product all seriously. my let It's will the of tell We product. line product be qualification me like a new The little bit you treated of take Mexico early, but thinking.

is as We until it we China release that confident version. absolutely and as will the high-quality not are it as reliable

ourselves. So, we not are to basically, ahead get -- going we going of to are

getting quarter. the this We in of are done qualification confident

the ramp. soft soft, We call what will we do it, a

will it. broad that start do customers we group, I scale. do focus a That's on color few year then introduce will right the now. We'll can provide We a with we'll a

Philip Shen

more relates set for housekeeping it of last timers. questions. one one Eric, this to be And might as you

air confirm, in a just revenue there cogs? timers timers besides in the You any but Were or were you there I very one shipments, any in to one seem wanted quarter, like clean G&A? going

Eric Branderiz

exists, front to for only rather the finished started had that So than of last Both the one clean, it's bit other thinking, the come is it OpEx the mind SOX straightforward. work that the a we right? year and artificial little QX on legacy pretty with pretty

Philip Shen

pass the you, progress on. great. and the quarter guide, general. and and Okay, just both. Congrats And Thank I'll great in it development on

Operator

Credit Suisse. with comes question next Our Mandloi Maheep from

Maheep Mandloi

my taking question. for Thanks

QX? talk guidance the component gross impact of on can Just much includes margin, charges the the in about how of you the

Badri Kothandaraman

Yes.

to we in spending points guidance a As includes per script, charges. XXX margin component gross XXX-basis the said XX% the XX% to

Maheep Mandloi

regard? earlier. probably QX, more And can based I've using anything Harbor? looking -- for the customers looking we Harbor, or on for talk far what stream our which call, -- generally, details AC on next it capacity talked be on for else you microinverter Safe or that in and been your in your missing can Is and have it they Sorry we about so warehousing on just expect will this but said the the learn Safe modules; the in are

Badri Kothandaraman

eventually. know more available we be I right for three to going the don't to will and share next be the with it but of microinverters, share have that details our mean and a you looks you nature it's too have in with early to human the and we'll months us the talking customers about it now We race like it's that now. of the be right need

Operator

Williams question next Meikle with from Our comes Brad Trading.

Brad Meikle

taking the for Thanks question.

the end you'll X-million-unit it's of April, have capacity. saying so essentially by QX So,

guess. about So, I $XXX,XXX, you shift

more capacity you'll you're laying twice much on months from way have as five the now so, And than it out. based

you how you. -- bookings, it's for may that if may guiding on can there bit that where color in to be even Like, some of coming though little you're be of period. on you not fill from? with incremental got on that not even how number So, demand a much visibility is demand Thank that that and

Badri Kothandaraman

capacity are we X-million-unit mean I planning a for in right. 'XX. you're Brad, of So QX

press are I top sheet. growth of of place us component in measures go will profitable mean line etc., back the shortages. that's in vectors release, saw We Infineon root to having our line I our terms help And to you clean said top cause that's vectors. that, going balance a the putting is how growth profitable

they their make long is want of a with a driving lot is on it's and IQ And service, often, is come product. they you because the sure tail a Now customers. customers target highest that to limited That quality and importantly, our that obviously do four terms XXX PPM know, Enphase with a as long-day of for of all DPPM. is tail they when and secret, it jobs customers the high-quality board. strength the a strength is it's most in great total long And across people no have are problem -- great X great customer one the P&L think product product is long-term value primarily solved Very in eight and of we number proposition immediately. have they crews very to that and is we focused is

super call excel day. first that resolution the for job where really And So, we to is make easy. is long our important is

long our product to So, else. easy tail, anyone -- just smooth buy Enphase they they product so when they that not hopefully it's switch the will an to for use

our long is value the fundamental that of tail. So, proposition

a seeing So, long are of strength lot across tail. we

addition, the X in strength. customers, we also seeing are some they tier In growing of are

talked few As great works. a did have we talked more we release. we about about partners, Panasonic, which modules, talked talked about we AC press our about a SunPower, the we We Solaria, in

more AC long lot lot it's use. is and because it's that tail field quality into to a so factory makes absorbs another So, activity preassembled. a high It to it already yet very comes of easy that the just easier because module again,

And need it on. for another the are too we So, the historically, And us. solar together all like lot well hope you are true half. a about for told industry. the Harbor of what driving these which strong be strength Safe to now early for too. in second us get actually and to as is the call piece QX QX I It's is visibility But I talking

And to for a number, long-term. right as QX it we we'll of are getting the short-term, in make million is sure better. this the doing have that for units, we in prepare you X the company to long-term. know the we unit we keep have now, whatever we the to for decided capacity number capacity informed Irrespective 'XX So, and million want what happens X

Brad Meikle

numbers market point, in that share have what a variation you at of you you be? a say of share some would what out Let's time, to that there. the sense for share would the sense Do in some your be? have million you market you see all But point capacity, were that do got there's if X ship market to

Badri Kothandaraman

market making I'm way customer need still the me, the a because share off; that, is total problem Brad, easier still of partner. solar is involves before really half. that works took But problem. most available not time, is I both company that's to makes about this yes it market easier in that generate our and know to a problems the how the to know will share see we modules; and to addresses share thing the for means it installers Is of how as I we so And to factory than partner lot is maintain and to activities a well the order a I differentiate an really value, of how Ensemble when what the so for that homeowner. installation the can value. a how the wanted input? important. the field installer available the addressed homeowner don't about as that market we going product what latter -- can drive market That solve that easy creating focus that's so lot product? important output can AC solution into absorb what while the for And Ensemble customer's and you grid at And time, I and you I innovate you is Ensemble; use believe the customer differentiation I the can I things. better that I value it innovation for to we problem speculate tell reduce that will better solve can we think why is on I most, on like But the Can as consider the for my on total market focus installation be an competition? and our problems? therefore We

Brad Meikle

trying four if question units, back kind of to The the that dominant than X ago, share that really years had or market is thinking million three units is to market. the he got Enphase X frame million about or more

So, appreciated. much you get any And that would that's help on can be very Thank you offline, much. it. that

Operator

with Our Pavel comes next question Molchanov Raymond James. from

Pavel Molchanov

midpoint. as chain Thanks for the gross want for in in go I to to QX, why suppose indeed is margin, improve supply guiding the benefit from also I going the loosening taking the you're back XXX% said, and margin QX. at margin basically QX QX? payment, If you've guidance better carries to question. could getting which wouldn't Because versus overall the you're the actually flat final partnership

Badri Kothandaraman

the one. Pavel, number XX%; So to embedded range XX%

of balance are going talking in number revenue the extra that, said, of The agreements the to increased said about supply going 'XX. we delicate down, dates supply. what and between needs go second it product customer lines exactly the is the Having a they're most can but like second into trickle from one of some I date because down and of is to half an 'XX, we the supply it is

XXX guide. points, margin therefore, fees of enough XXX-basis is gross tune to the expedite QX there will have still So, to already

Pavel Molchanov

warranty Let obligations. me about also ask

QX. obligations reference Given kind up was you down your that actually explain edge Can quarter. that the revenue of obviously that is Work was? how increasing in seasonally

Badri Kothandaraman

-- running started we the company we quality first of or Look, focus with service that the product after I we we learned on from mean this two, learned. company, anonymous started the when company and right the customer year innovation. are only That's cornerstones are and what not the

has reduce stage Because basically is number from is do a stages that better in traditional it reduced microinverter at because there's on components, better AC look that, stage. the and it Because generation. calculator and do to the So, to with stages We if of it people reduced the is able there's of better is quality components. has every number microinverter of two gets number and of better inherently and the AC and that predictive we one and our -- way other provides if it an you at competition, we a in look do that two stage got one our got basically you one AC microinverter, have stages.

The efficiency would casing of lesser lesser need lesser number our generate second metal means we heat, do. because we and we higher. is lesser do is use Because components which stages, heat, A aspect number we of plastic generate casing. not that

Then it we the is it quality our are reasons principals, designed for quality the example, of way architecturally, the on in going about the is quality failures usually to are "You for to by last years have correct beat So, we two product to to are the a and suppliers. bill your on better that the construction is saying, deep that them understand process business us, process week, and are relentlessly room, a we remove dogmatic into are So, and the related change until all is of like, our back design came ingrained exactly that going the we in failure which understand the dig is failures or that XX% during materials." from we we why go we failures And getting many need that you at. that's we in of we happened. the

perfect DPPM our not are today, is DPPM We but is XXX. target long-term X.XX%. XXX

that's that we the quality strongly are very how company. run We are but in something believe we our there and principles today, not

Pavel Molchanov

one; quick one more revenue away to break driver, battery from out megawatts? microinverter the becomes do you needle-moving the that eventually plan as a Just

Badri Kothandaraman

but I idea. I I bad be that it's think like it may to a think with CFO, my not a need good it question. looks debate

Operator

with question comes HC from next Our Wainwright. Amit Dayal

Amit Dayal

the X something growth? could customers, emerged guys? is of a or reliable Badri, for tail/tier you grow now has sort channel this just that with Is this long that sustainable on most this is

Badri Kothandaraman

customers to X because tier tier we the mean, definite to and actually two that emerge X have rate X. you emerging tier from or X on actually an I are they tier customers

were sustainable. we us. they've they had Yes, helped down a Yes, relationship us. They with actually us when the they're long-term yes, in dumps. helped So

So, the end yes. of

Operator

turn Badri quick a for Kothandaraman questions back not call showing I'm time. like the to to further any I'd closing. this at

Badri Kothandaraman

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

Operator

today's this concludes Ladies and gentlemen, presentation.

a and wonderful You day. have may disconnect now

Enphase Energy (ENPH) 30 Apr 192019 Q1 Earnings call transcript