Home energy technology company Enphase (NASDAQ: ENPH) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 7.8% year on year to $410.4 million. On the other hand, next quarter’s revenue guidance of $330 million was less impressive, coming in 11.9% below analysts’ estimates. Its non-GAAP profit of $0.90 per share was 37.2% above analysts’ consensus estimates.

Is now the time to buy ENPH? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Enphase’s third quarter featured revenue growth that surpassed Wall Street estimates, but the market reacted negatively due to concerns about the sustainability of this momentum. Management attributed the quarter’s top-line performance to strong U.S. demand, normalization of microinverter channel inventory, and a record quarter for battery shipments. CEO Badrinarayanan Kothandaraman highlighted the impact of safe harbor revenue pull-forward and noted, “We reported quarterly revenue of $410.4 million, our highest revenue level in 2 years.” However, management expressed caution regarding elevated battery channel inventory and ongoing international headwinds, particularly in Europe.

Looking ahead, Enphase’s guidance for the next quarter fell well below analyst expectations, with management citing both channel destocking and the pull-forward of safe harbor revenue as primary drivers. Kothandaraman acknowledged, “We want 2026 to have a very healthy setup in the channel,” and noted that the expiration of the U.S. 25D tax credit is expected to create a seasonal trough in early 2026. Despite this, management pointed to potential recovery drivers such as interest rate declines, new financing solutions, and product launches—including the IQ9 microinverter and fifth-generation batteries—as possible catalysts for renewed growth in the second half of next year.

Key Insights from Management’s Remarks

Management largely attributed the quarter’s outperformance to U.S. residential demand, safe harbor revenue timing, and new product adoption, while also emphasizing competitive and regulatory challenges in international markets.

• Safe harbor pull-forward: Revenue benefited from customers accelerating purchases of microinverters ahead of forthcoming U.S. Treasury guidance, leading to higher-than-typical shipments in Q3 and expected lower shipments in Q4.

• U.S. demand normalization: Management pointed to a return to normal channel inventory levels for microinverters in the U.S., while battery inventory remained somewhat elevated due to early shipments of the new fourth-generation battery.

• International weakness: European markets, especially the Netherlands and France, experienced continued softness as policy changes, reduced incentives, and increased competition weighed on demand. Management discussed the strategic pivot toward batteries and self-consumption as paths to recovery.

• Product innovation trajectory: Enphase highlighted several fourth and fifth-generation product launches, including the IQ Battery 10C and upcoming IQ9 microinverter leveraging gallium nitride technology, positioning the company for future cost reductions and new market entry.

• Tariff headwinds: Reciprocal tariffs on imported battery components pressured margins, but management expects to mitigate this by transitioning supply chains out of China and ramping U.S. production, especially for batteries and microinverters.

Drivers of Future Performance

Enphase expects near-term challenges from tax credit expirations and tariffs but is banking on new products and financing structures to drive a second-half recovery next year.

• Expiration of tax credits: The end of the U.S. 25D tax credit is expected to trigger a significant decline in residential solar demand in early 2026, with management viewing the first quarter as a likely trough before recovery can begin.

• Innovation and product launches: The introduction of the IQ9 microinverter for 480-volt commercial applications and the fifth-generation battery are expected to lower system costs and expand addressable markets, particularly in the U.S. and Europe.

• Financing and regulatory adaptation: Management believes new financing solutions such as prepaid leases (PPL) combined with loans, along with easing interest rates and rising U.S. power prices, may offset some of the demand headwinds and support a potential rebound in the second half of 2026.

Catalysts in Upcoming Quarters

Looking ahead, our analysts will watch (1) the pace of channel inventory normalization and destocking, (2) early adoption and cost impact of the IQ9 microinverter and fifth-generation batteries, and (3) the rollout and traction of new financing structures such as prepaid leases. Execution on transitioning supply chains away from China and progress in key international markets will also be key signposts for recovery.

Enphase currently trades at $32.69, down from $36.75 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

Stocks That Trumped Tariffs

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.