Enphase Energys Q1 Earnings: Analysts Top 5 Questions and Managements Responses

Enphase Energy (ENPH) reported its first-quarter 2025 earnings, which saw a marked negative market reaction due to the company missing Wall Street's expectations for both revenue and profitability. The management attributed the performance to several headwinds, including elevated channel inventory and softer demand in the U.S. residential solar market, further strained by high interest rates and the financial distress of a major leasing partner.

The company's revenue came in at $356.1 million, missing analyst estimates by $5.9 million or 1.6%. This represented a 35.2% year-on-year growth, but was below the analyst consensus of $362 million. Adjusted earnings per share (EPS) were $0.68, missing analyst expectations by 5.9% at $0.72. Adjusted EBITDA was $76.69 million, missing analyst estimates by 33.4% at $115.1 million.

Despite the challenges in the U.S. market, international sales, especially in Europe, grew on new product introductions. However, overall sell-through was below typical seasonal patterns. Management noted that the U.S. solar market remains under pressure from high interest rates and many installers, lease providers, and distributors are navigating through a tough environment.

During the Q1 earnings call, analysts asked several questions that highlighted topics the management team would rather avoid or where the answer is complicated. Some of the key questions and answers include:

• Praneeth Satish (Wells Fargo) probed whether Enphase would pass tariff costs to customers or absorb them. CEO Badri Kothandaraman explained that most costs would be absorbed temporarily, with supply chain changes expected to resolve the issue in a few quarters.
• Phil Shen (ROTH Capital Partners) asked about the expected revenue cadence for the year. Kothandaraman refused to provide multi-quarter guidance but highlighted new product launches as potential drivers for growth in the second half.
• Brian Lee (Goldman Sachs) questioned battery shipment volumes given tariff impacts and pricing. Kothandaraman emphasized reduced system costs from new battery integration, expecting continued growth despite near-term margin pressures.
• Mark Strouse (JPMorgan) sought clarification on supply chain adjustments for the 10C battery and the impact on rollout timing. Kothandaraman confirmed plans to quickly align supply chains for domestic content and minimal rollout delays.
• Andrew Percoco (Morgan Stanley) asked how Enphase expects to secure affordable non-China battery cell supply. Kothandaraman described working with two new suppliers and stated the transition's success is critical to restoring margins by mid-2026.

Looking ahead, the StockStory team will be monitoring several catalysts in upcoming quarters, including:

• The pace and effectiveness of Enphase's supply chain diversification away from China for battery cells
• The commercial adoption and cost impact of the fourth-generation IQ Battery and IQ9 microinverter
• The evolution of U.S. energy policy and tariff enforcement
• Execution on new product launches and progress toward normalizing channel inventory

Enphase currently trades at $36.51, down from $53.50 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free).