TYGO - Earnings call transcript Q3 2024

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Operator

Good afternoon. Welcome to Tigo Energy's Fiscal Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Joining us today for Tigo is Zvi Alon, CEO; and Bill Roeschlein, CFO.

As a reminder, this call is being recorded. I would now like to turn the call over to Bill Rochlein, Chief Financial Officer.

Bill Roeschlein

operator. you, Thank profitable to we'll like business that of and some our prospects. long-term We on remind this matters become revenues our discuss to expected our call, the overall ability growth would increase everyone and including outlook, our about recovery position statements future are and are and inventory factors our and our demand Risk regarding market in unknown not timing for the forward-looking known the XX, levels the products, future and on our share, financial in Expectations for their and including our industry, time thereof, and our report including, inventory adjusted fourth September our such, to revenue release competitive and on SEC to XXXX, on Form for those Factors limited with results, quarterly of to, annual impact XXXX, and reserves press reports international to discussed expand as its our shipments customer in investments may on ended XX-Q ability expansion and markets, quarter supply risks impact EBITDA file today's and report subject uncertainties, but time. the XX, in our our the December XX-K and section in product described time our including market penetrate we our fiscal quarter and new markets the the the share, current for and Form our other XXXX, from ended year fiscal portfolio of

the cause statements made. made expressed the forward-looking on risks when actual are to those from of as call. and results These uncertainties differ could materially only These date

as reconciliations an our include performance substitute certain financial for superior financial our reference X-K. exhibit the press provided The be non-GAAP will to or release we to financial with non-GAAP today, considered GAAP. of as not call measures. should in our measures measures Form prepared a non-GAAP to accordance furnished We in GAAP During

investors.tigoenergy.com. webcast, being Alon. the call Investor made With I'd will everyone call now and like at that, be that to Zvi at is I Tigo's this available remind would to for website CEO, Zvi? a like Finally, Tigo's conference to replay recording over Relations turn

Zvi Alon

that, Bill. in as will as performance the commentary discussion, as trends quarter closing provide opening discuss fourth financial outlook share turning today's some highlight on before questions. some the our the well more for and He begin After our to well as for I you, Roeschlein. results I remarks the key areas provide recent our conditions quarter our of depth market in will for over Thank To call XXXX. CFO, Bill call before will

Okay.

revenue quarter the Let's XXXX. get we in experienced last started. Since of the increased have X quarterly quarters growth XXXX, fourth of of each

to also illustrated market from XXXX X% benefiting recent Tigo data from as in industry, DC showing global XXXX. the addition industry the share conditions in In to gaining we are in market improved solar optimizer by share increasing XX%

XX,XXX utility area success focus seeing MLP key recent of than TSX-X-O units are deliver to within has where we devices. which Tigo includes been by us Brazil's A system, selection the scale the our good as for market, floating for largest newest more evidenced of

customer complete using we for that Spain. the project our delivery high As newest are quarter utility we scale the positioned our platform is one which the previously quarter, Meanwhile, believe -- we you reflection device, address is the as to in with this shared Brazil. MLPE to in last ideally as the announced EPC one to TSX-X-O we of XXX-megawatt final bifacial expect

the hope to future. more talk positive pipeline in We coming which continue to have see in details from this of opportunities, market strong trends and a about we

grow with is Predict+ energy platform management. AI-based our EI consumption continues where meters within and Another production our key solution, to focus under area software XX,XXX

X to contracts and signed our additional $XXX,XXX. both we enable multiyear new million contracts per new annual now Most us X for a and quarter, years meters value increase having ARR, year. total contracts the $X.X at contract recurring are of During or stands which revenue,

on and results, To some in growth color positive we Kingdom saw geographical United the Republic, Czech the sales our give quarter. during Spain

for footprint has some focus Rico for growth We a some regulatory notable in also which sales key sales been area benefits. a Expanding as into basis, Thailand sales driven in us growth growth we saw -- we markets solid Australia. partnership both exhibits and seeing saw the Rica, by our announced quarter-over-quarter and in new are a on volatility increasing Puerto new a and Costa shutdown requirements rapid

Additionally, sluggish Germany, have Italy the details a will including other mentioned we and these some markets, growth negative seeing some offset I regions Bill more or in or larger additional are are Netherlands. minute. helping in us

we Officer, as in to Operations XXXX COO Anita originally back Lastly, Chang the welcome our VP Chief served as from XXXX Operating Tigo joined who as XXXX. and

industry to extensive chain the asset a with make her like that And Bill? turn in driving Bill. of forward. supply knowledge and We key experience I would operations to will operations her in are that, confident

Bill Roeschlein

Zvi. Thanks,

year our XX.X% and basis, including X.X% increased for September On from coming from sequential the $X.X XX.X% the a million XXXX. regions, was Republic, EMEA X.X% XX% the $XX.X of quarter now increase. results Americas By the sequential of Australia. a period. improved increase. revenues XX, of for revenues, Spain, revenue XX% APAC to third or with Revenue $XX.X U.K., XXXX to Thailand decreased a million million results or countries EMEA Turning revenue and revenues, in financial region, third total sequential total the ended was Czech in the many XX.X% quarter prior

XX% revenue primarily $X.X The million to period. inventory was to -- battery the compared decline XX.X% for inventory. million revenue or million, in quarter an year charge sequentially. comparable third X% decline $X.X of year-over-year in was or in $X.X due ago profit $X.X of primarily of APAC the total of million Growth was XXXX of XX.X% revenues, of was And revenue a or

value and prior million environment. net by $XX.X decline XX.X% in cost-cutting management's previously reflects pricing expectations of efforts. million charge period. The current our primarily was announced future The and year declined battery to the third the for operating the the compared expenses estimate incorporates of driven Total to inventory's realizable quarter $XX.X

Operating year $XX.X third for prior in quarter third X.X% the Operating was $XX.X $XX.X loss -- to compared quarter period. period. the a prior decreased million the by net million for $XX.X compared to the to of million loss year GAAP in million net income loss

in period Adjusted to the our third adjusted year million prior period. year As $X.X compared a a mark-to-market XX.X% loss million loss of decreased prior reminder, convertible for EBITDA to EBITDA the adjustment reflected for note. quarter the $X.X

includes EBITDA mentioned charge previously inventory $X.X of adjusted the loss Our million.

outstanding As reminder, adjusted XX.X transaction of amortization, stock-based profit for operating compensation EBITDA adjusted a represents or the M&A Primary as shares and expenses. third quarter XXXX. for million were loss depreciation,

from compared Turning $X.X last decreased now to the by sheet. and the $X.X comparable to quarter million compared million quarter million quarter comparable or the this decreased year ago balance and in $XX.X last $XX.X X.X% million $X.X to period. receivable net period. ago to million in Accounts net $XX.X year increased Inventories million

with XXXX. reducing to we securities long-term reduced and at our burn cash $X.X inventory Cash, on continue rate totaled and declining XX, make we September and million short- as a basis, by million On capital. progress $XX.X our marketable sequential cash cash equivalents working

XXXX minutes over outlook take a quarter. the Zvi, to provide now call I back Before I to financial our for the few fourth turn will

As a be we provides adjusted as believe our quarterly overall Tigo revenue EBITDA these reminder, to as for indicators guidance business. well the for metrics as of key performance

to adjusted XXXX, quarter expect fourth of EBITDA and the we be revenues range. For the following in

between range We XXXX, expect million million. the $XX fourth revenues quarter in to December $XX ended and XX,

We expect $X.X to $X.X EBITDA million. between adjusted million loss range and

our guidance need Our includes additional inventory year-end audit. for potential as we the charges complete

forward updates the the that and achieve business we growth and back the over in being are final I'd to that our summary, to as now Zvi? That to continued into rest seeing XXXX. Zvi look we The turn remarks. sharing like call confidence we growth my further of the and market XXXX initiatives profitable progress for gain completes near future, will momentum we to through are that and share provide undertaken in positive

Zvi Alon

Thanks, Bill.

portfolio industry contending the still believe robust competitive headwinds, While us pressure. is product positions our that mitigate with we to

expect steadily and into solutions throughout remainder XXXX we As continue profitability of and XXXX. to return the our increase demand for to revenue

encouraged built of providing open last call are have leading the be to that, solar mission in of X our by updates Q&A. and quarter. additional With advancing believe forward on the the prospect please and to firmly over look momentum a solutions. intelligent we the the focused We quarters We our business growth for operator, storage and provider coming remain energy in

Operator

ROTH Our first Capital Partners. comes Shen Philip of from question

Philip Shen

QX. in implied as gross wanted quite 'XX. QX, the I to outlook on get The margins can we for check especially margin to through were low with in margins, we for margins. get an you

share think the can think you through you what would be cadence and on revenue that that margins is do 'XX? of great. If basis a then quarterly is, what you But

Bill Roeschlein

Phil, like things in manufacturing without that outsourced mid-XXs. are have a Well, and an basis given model, margins charges our we inventory that on the normalized

inventory out And XX%. would so quarter, the charge, for if you this we have factor around instance, been

our was at would expect to of a into XX%, high margins revenue high that's to closer grows, scale we economy more reach grow normalized as look our on be were that next hopefully we the QX the XXs And where of get we point number So to year, of which in can 'XX. basis. we as where as and target

things. In can there, couple point at of different we mathematically it ways. out look and just terms you growth of I'll the several get how a in

XX%. of so XX%. QX quarter, teens of now midpoint up sort we basically XX.X%. almost variety of where were Our were XX%, can we mid-teens, different at it model you are The actually. is high with acceleration The flat to into up The up XX%, guidance ways is some a we either current to previous XX.X% is up which quarter,

basis And would that where us on do of a continuing sequential each take you to can the quarter. see model

would we and rate talked area, year-over-year a our EBITDA that that's in we that about You that can see revenue growth which million to revenue from is. us XX% of XX% where plus breakeven XXX% -- growth have gives $XX to previously anywhere

the that's that. so how we're continuing we're towards We're about in we're and steadily And go and direction. right marching business, to progress, thinking making the

we're that something into macro is but course, and can't pretty the far. we we of as so happy business the thinking move XXXX, we've about how picture progress control, made we're Of the that's

Philip Shen

in levels you in Back cleared. reducing in about inventory your channel still distributors the with and about being elevated about And the think I you're inventory. this inventory talking your talked guys quarter, August, channel high. inventory being largely overall And you Okay. talked XX-Q,

the when in And inventory European you or months weeks many to how think Europe? channel I And the understand so you clears? wanted channel do in think truly is

Bill Roeschlein

might -- There relatively it competitors other of far might cleared. as But I We never cleared. So overall just to the mostly is as customers elevated XXX ourselves because are channel perspective channel the stuff. issues. some to stuffed X out the say -- commentary have We some or word customers inventories hundreds us is from distributors have relates our ahead is never that still X macro channel primarily of be carry we But is got primarily maybe inventory multiple that have. overall, of want a still may or it the vendors.

of carrying having And sheet, balance so to for inventory. of our doesn't they're if market it some rest a they're inventory that to and hangover general relates balance relate their the the pressure they there. just on It necessarily the have in

And that as all through what not with vendors, we're issues macro so going but right at ascribing some with a symptom really level still we're to, inventory a see of it clearing now. we there's

Zvi Alon

of would majority into is I distributors for been get believe continue increased customers, to that highlight, going orders we I add new that also we seeing I And the QX, number has shared repeat substantially. to of growing stock orders to would started distributors. from that end our and an at repeat like are that of continually orders Phil, say demand. the the we supply existing

of I would So overhang we from gone. Bill's problems point is perspective, view. the second the had last that from almost

Philip Shen

Great.

Okay.

your be will early call. breakeven what That's Sorry you you if 'XX, HX but I 'XX? reinforce this, QX EBITDA that about missed talked did on first in half the

to going in you are now? year me, remind later the perhaps be Just

Bill Roeschlein

Yes.

We're first is the we'll up this the number just rate second we now. that that I year. in sort half half year, or from XX% it to of at if So And in not flat anywhere in of quarter. growth suggests that between at level flatline the guiding of trajectory we XX%. achieved we occurs XX% that QX, Whether We a the breakeven would -- the achieve. second XX%, number answer of half the be it XX% obviously anywhere first the XX% last it half to

on draw not we're said, being the That straight making just unpredictable to line. market's a predictions too

first so said or view. -- -- XXXX whether the what going it's half we're what last on we in the so definitiveness if first look we half -- that And And I making, at to to can't you But be say so call of year. in can't going was our progress half. second it's the with be

Philip Shen

Great. ADLP And cut from me then of their recently authorized their Europe their one product wrote just list an We last SolarEdge stopped for to XX% promotion in pricing. price by question price. that for in terms distributor XX% and running standpoint, is

promotions. as doing heard we've others lowering to so that as well, price vendors running Chinese And opposed

lowered price XX% I to XX%. SMA, then And by think,

action on and price can you on basis. per But approaching especially guys you it's how that know would speak I given recently? know watt, to well, a you taken anyway, -- just any great. price have So be the dynamics, per don't I you're don't sell competitive -- exactly if guys unit you pricing,

Zvi Alon

special to saying have discounts as price. we we at various it prices maintaining Happy pretty last year, are we cases. discounts I use to, Obviously, over would providing the as not. a been in our had summarize decreased we have for market. matter have to suppliers, those make same we some heard have that required of we question. But new highlight higher at the the our the about much other positions, some introduced, in of in answer not And type same that fact, product products. make uptick to we some a respond the SolarEdge changes has a also orders TSX-X the in line product We've line been the and introduced and we've or but would so very been seen -- any I not nice far price, before. overall,

Philip Shen

price a Do lower in the Okay. coming quarters? expect you

Zvi Alon

no. is The answer

Operator

of next Our question Eric comes Stine Capital Group. Craig-Hallum from

Eric Stine

and And mentioned for share in share you can any So I in architecture may appreciate, this had would going in kind be and market I come to into answer. on trends? things current thoughts your especially dislocation would tough Europe, of But inverter-agnostic market market on and 'XX, 'XX different is countries where Europe, given play. think,

Bill Roeschlein

we've And of market from XX% main a going third-party and to optimizers reports volumes about industry I validate publish that gains comparison sell our XX% almost share, our XX%. quarter. the that, them unit us both we think if talked besides of we've Eric, increased a and against the it -- from few times our of more in their on calls, that you Well, reports, competitor to do number share each

have that our this continued from share demonstrated gain. that to the play what as analyze out. And far see mean, in But as looks like. quarter third in so here So the see I numbers published the soon they're by we quarters we'll year of and continue each we'll competitor, progress

Eric Stine

Yes.

Okay.

a guess on I me, little than your others, feeling. that maybe I what that's it like it commentary and specific markets will balance that I others. getting of I that's more you're I I by is the is positive to out, find noteworthy. And mean, in market, that's but versus guess some we seem sounds like the guess mean, but that So at. was does

Zvi Alon

I can more -- light. can I shed bit a

better of told that the big been the we last other recently, guys. the of have better optimizer in couple the European and for and markets, in than best-selling We are the the couple just a quarters than not market SolarEdge some but ones, of

Eric Stine

Got it.

I rapid I I it here. questions I'll traction But And nice gaining guess X curious, to licensing you've been device. mean, just the just on shutdown Very Okay. the know keep helpful.

in could maybe interest pipeline given talk Just market. if level you it's about there, product a the there, the unique pretty the

Zvi Alon

So some we yes, get years. I it been And been our you, the roster, also numbers tell they we licensees to can growing that over adding into ship. and steadily has insights have

gives to an as market the indication how doing So us as well. we're it in

Bill Roeschlein

-- remarks. it's us historically I have we're is the some Zvi's what growth in maybe was There of Italy. is show for is highlighting differentiates us in in this been able regions, discussed you're seeing that in of spite that that one think prepared large and newer to and and sluggishness thing typical Germany that markets, worth it's these is which

And so especially geographies, and normalcy, Germany, as cadence to revenue profitability return those return to help markets X ramp, those and going That's the of well. question of as to to the us EBITDA as Italy benefit the

are be cadence countries on But markets And so X to recovery benefits specific growth X those of because how everybody. the little of is the in of areas. the dependent those it in large some a going

Operator

Our of Wainwright. Joshi Sameer next question comes H.C. from

Sameer Joshi

just of Like going your for quarterly. expecting Bill, lines that the increased into you Italy around back Germany adoption? are following question in in those of XXXX, coming to terms you of -- assumptions that coming in XX% be sort revenue developing? see there -- the do to the assumptions? of outlook there was XX% mostly My APAC actually, up be second geography on level half these is contribution geographies that and these by commentary. that may Is from half time Or second how

Bill Roeschlein

Yes.

ability hasn't sort the the we're growth more Republic, mentioned, U.K., Czech current large been is past. total, have than it recent which from board geographies been in and that our that these putting newer of the of to expand XX% So was our some mid-teens on in Australia that land coming of

say, sort been a has we Italy, or so a some to internal positive as return pattern would of to Germany to growth -- to through going sluggish issues. and do and relates of see which then been just, more has normalcy sluggish more And I which it

issues that also very Netherlands, which And we don't -- it see see we having are specific are that country. the transitory. just markets But those to as as

in there that believe do improvement be we So XXXX. will

in once revenue, we're have improvement markets, to well that be incorporate so those that for should bode able growth we And and and going into our to own us.

Sameer Joshi

your charge you be And the of the next in mentioned addition this of prepared likely part the [indiscernible] or mentioned is because is remarks, mentioning -- Understood. quarter. I it million there think the you is quarter current that then where higher in -- $X.X quarter? a And million devaluation $X.X to is is is, charge, mainly in saw $X.X prices? What in in than it directionally, is X because Or question million -- of inventory this reduced we then charge to going

Bill Roeschlein

So ESS yes, has GO degradation obsolescence. to hypercompetitive. more -- batteries I'll and comprised related steeper more take price not your It's a competitive, second product first. is and curve environment. pricing in It's which question It's line, has which much our to more related quite of inverters, much

I And mentioned reduced remarks, for so and the current in quarter, to prepared be and to carrying our order be to environment batteries. in in as able cost accelerate -- pricing current the able we we to sales the future adapt

pricing in of risk also again, guidance the that our because ESS audit X incorporates GO analysis we the years, which, on the changed the for line has of the prices it's carries legacy pricing. a done year-end it's line, part TSX remarks stable balance the of it that haven't has because represents potential GO more products, We which than to very yet, have it prepared us. does of -- in and ESS degradation remaining mentioned some in my pricing primarily Compared and been not more

are there, and you general TSVs? the So every competition question seeing of, get time for asked pricing in in No. changes we

pack involved. product inverters, that and rest players lot as very But the that in We separates there's differentiated from the with product. have us batteries know, you a a of more

have And QX. we the be why so investors in to environment. as out to put of to be for that current adapt aware there potential we pricing marker able that's And a to

Operator

would showing remarks. for to like turn closing further am this now questions. I [Operator Instructions] to it At no back I time, Bill

Zvi Alon

continued well joining Operator? for today. ongoing their to thank want our for customers everyone, work. again, I for Thanks thank to contribution want and hard especially as partners investors as also us the employees for their our their I support. continued dedicated

Operator

Thank you Earnings for joining us Call. Third today XXXX Conference for Quarter Tigo's

disconnect. now You may

Tigo Energy (TYGO) 6 Nov 242024 Q3 Earnings call transcript