Here's our initial take on Enphase Energy's (ENPH -13.81%) financial report.
| Metric | Q2 2024 | Q2 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $303.5 million | $363.2 million | 20% | Beat |
| Adjusted EPS | $0.43 | $0.69 | 60% | Beat |
| Adjusted gross margin | 47.1% | 48.6% | 15 bp | n/a |
| Free cash flow | $117.4 million | $18.4 million | -84% | n/a |
EPS = earnings per share.
Enphase Energy is closely tied to the emerging solar industry, and current events, ranging from tariffs to disappearing subsidies, have put the entire sector in the doldrums. The company's latest quarter shows management is doing what it can, but it leaves little hope for a quick turnaround.
Enphase grew revenue by 20% and adjusted earnings per share by 60%, beating expectations. And adjusted gross margin ticked up slightly. Much of the growth came from outside the United States, with European revenue up 11% sequentially.
The results include adjustments related to the benefits of the Inflation Reduction Act (IRA), which provided subsidies for solar installations. Backing out those adjustments, gross margin fell to 37.2% from 38.3%. The reciprocal tariffs also had a negative impact, which the company estimated at about 2 percentage points of margin.
Enphase continues to be cash positive, though less so than when times were better. The company ended the quarter with more than $1.5 billion in cash and equivalents on hand to help ride out the storm.
The results were solid, but the outlook remains dim. Enphase stock, already down almost 40% year to date, fell another 3% in after-market trading following the release of the numbers but ahead of the call with investors.
Enphase is forecasting revenue of between $330 million and $370 million for the current quarter and a gross margin of 41% to 44% when factoring in the IRA benefits. That's below Wall Street's consensus estimates, and with much of the IRA scheduled to be phased out, the journey is likely only to get harder from here.
Assuming solar energy has a big role to play in the world's shift away from carbon-based energy sources, Enphase remains well positioned to benefit from that transition. But that future looks much further out than it did a few years ago, and with tariffs still unresolved, the odds of clarity in the quarter to come are low.
Enphase remains intriguing for long-term holders, but investors are likely to have their patience further strained as we wait for a catalyst to emerge.
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