Enphase Sell-Through Misses as Fourth-Quarter Outlook Falls

The Tip Desk · November 8, 2026 · 4 min read

Third-quarter revenue was $293.3 million and global sell-through rose only about 1%, below the 10% the company had expected.

Enphase Energy (ENPH), a global energy technology company, reported third-quarter 2026 revenue of $293.3 million, a modest sequential increase from $291.9 million in the second quarter after a $9.0 million rise from $282.9 million in the first quarter.

The company said global sell-through increased about 1% sequentially, below its expectation of 10% growth, contributing to revenue at the low end of its guidance range. U.S. revenue rose about 3%, which Enphase said was a smaller-than-anticipated increase due to soft residential solar demand. European revenue decreased about 11%, which the company attributed to summer seasonality and continued weakness in certain solar markets.

U.S. sell-through increased 5% sequentially but declined 35% year-over-year, broadly in line with third-party reports of U.S. residential solar market trends. European sell-through declined 12% sequentially, reflecting seasonality and softer demand, particularly in France. Safe harbor revenue was $85.0 million, compared with $84.3 million in the second quarter.

GAAP gross margin compressed to 43.3% from 60.0% in the second quarter, after expanding to 60.0% from 35.5% in the first quarter. Non-GAAP gross margin declined to 45.0% from 46.8%. The company said the third-quarter decrease in non-GAAP gross margin was driven by product mix. Reciprocal tariffs reduced gross margin by about 1.3 percentage points, down from about 2.0 percentage points in the second quarter.

GAAP operating income fell to $6.5 million from $51.5 million in the second quarter, after recovering from a $29.6 million GAAP operating loss in the first quarter. Non-GAAP operating income decreased to $53.6 million from $56.7 million. Non-GAAP operating expenses were $78.4 million.

GAAP net income was $23.4 million, or $0.17 a share, down from $36.1 million, or $0.27 a share, in the second quarter. Non-GAAP net income declined to $54.0 million, or $0.41 a share, from $61.5 million, or $0.46 a share. GAAP and non-GAAP diluted EPS were reduced by $0.15 and $0.14, respectively, due to impairment in investments.

The company shipped about 1.42 million IQ Microinverters, or 655.2 megawatts DC, down from about 1.59 million units, or 725.2 megawatts DC, in the second quarter. IQ Battery shipments were 129.9 megawatt hours, up from 113.8 megawatt hours. More than 26,000 installers worldwide were certified to install IQ Batteries, up from more than 25,000.

Cash, cash equivalents and marketable securities were $931.8 million. Cash flow from operations was about $0.1 million, down from $40.3 million in the second quarter. Capital expenditures were $11.5 million.

Enphase said it successfully demonstrated 13.8 kV AC to 800 VDC conversion using IQ SST technology at its Austin, Texas, R&D lab, with 132 power modules operating as a single integrated system. The company said IQ SST maintained a stable 800 VDC output during rapid load changes that simulate the dynamic power demands of AI compute racks. It more than doubled its IQ SST customer and partner pipeline to over 50 during the third quarter. Next milestones, the company said, are to validate operation at 34.5 kV and demonstrate a megawatt-scale system by the end of 2026. It said it is engaged with a leading hyperscaler and a global AI computing leader, remains on track for customer pilots in 2027, and expects commercial shipments to begin in 2028.

The company said its core U.S. residential solar market continues to face headwinds from higher interest rates and the expiration of the Section 25D federal tax credit. It listed five growth drivers heading into 2027: fifth-generation IQ Battery G5 for global residential storage; the Propel prepaid lease program; commercial solar with IQ9 Commercial Microinverters and the upcoming IQ Battery C80 in the United States; unidirectional and bidirectional EV chargers; and IQ SST for next-generation AI data centers.

For the fourth quarter of 2026, Enphase estimates revenue of $225.0 million to $255.0 million, including shipments of 100 to 120 megawatt hours of IQ Batteries, approximately $51.2 million of safe harbor revenue, and sell-through down 10% compared with the third quarter. GAAP gross margin is estimated at 38.0% to 41.0% and non-GAAP gross margin at 40.0% to 43.0%, each including about 2.0 percentage points of reciprocal tariff impact. GAAP operating expenses are estimated at $119.0 million to $123.0 million and non-GAAP operating expenses at $76.0 million to $80.0 million, excluding $43.0 million of stock-based compensation and acquisition-related amortization.