Enphase Energy, Inc.
For the period ended Dec 31, 2025. Filed Feb 17, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 17, 2026
ENPH$28.47-1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-10.
0001463101-25-000024
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-17.
0001463101-26-000013
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 107 previous paragraphs and 119 current paragraphs.
59 unchanged; 39 reworded; 18 added; 9 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 11 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
During fiscal year 2025, our priorities included providing excellent customer service; scaling U.S. manufacturing and advancing product qualification to take advantage of both the Section 48E investment tax credit and the AMPTC under Section 45X of the Code; enhancing our Enphase Energy System offering through continued product innovation and system integration; broadening our ecosystem capabilities through collaboration with utilities and the development of VPPs; strengthening partnerships with installers and TPOs through safe harbor agreements; and increasing operating efficiencies while reducing costs.
Current report
One Big Beautiful Bill Act. In July 2025, the OBBBA was enacted, introducing material changes to clean energy tax credit programs that are significant to our business and may impact our financial condition, results of operations and future prospects.
Current report
The OBBBA scales back the ITC available under Section 25D of the Code for residential solar and storage systems purchased through cash or loans. Under the new law, the Section 25D credit expired on December 31, 2025. In addition, the OBBBA imposes new timing requirements for eligibility under Section 48E of the Code, which governs ITCs for leased solar and storage systems. Specifically, solar-only projects that do not commence construction within 12 months of the OBBBA’s enactment must be placed in service by December 31, 2027 in order to remain eligible for the credit. Energy storage projects are not subject to this placed-in-service deadline; however, the ITC for storage systems will begin to phase down in 2034 — decreasing to 75% in 2034, 50% in 2035 and phasing out entirely by 2036.
Current report
The OBBBA also amends the domestic content bonus credit rules for Section 48E projects. Projects commencing construction after June 16, 2025 must meet a 45% domestic cost threshold, up from 40%.
Current report
Additionally, the OBBBA introduces new compliance requirements under the FEOC provisions for both Section 48E and the AMPTC under Section 45X. These provisions establish an escalating threshold of non-FEOC content that must be met by solar and storage projects beginning construction in 2026 and by manufactured components produced beginning in 2026.
Current report
On July 7, 2025, the President issued an Executive Order directing the Secretary of the Treasury to issue updated guidance within 45 days on the “beginning of construction” requirements applicable to Section 48E projects. In August 2025, Treasury and the IRS issued revised “beginning of construction” guidance for clean energy tax credits that only applies to projects above 1MW. The Executive Order also requires the Secretary to implement the FEOC restrictions set forth in the OBBBA. Additional guidance around FEOC guidance is still forthcoming and is expected to be finalized in 2026, which could make existing requirements more stringent.
Current report
These legislative and regulatory developments have impacted and may in the future negatively impact our eligibility for certain tax credits, the attractiveness of our offerings to solar and storage system lease providers, or the overall demand for our products. If we are unable to meet the revised domestic content or FEOC requirements, our ability to qualify for these incentives could be impaired, which may adversely affect our revenue, gross margins, business operations and competitive position.
Current report
Trade Tariff Uncertainties. The impact of new or existing tariff, trade restrictions or retaliatory actions on us, the solar industry and our customers continue to create uncertainty and impact on our business operations. We have relocated a significant portion of our manufacturing to the United States while continuing to utilize contract manufacturing in China and India. However, certain critical components for our products are still sourced from outside the United States.
Current report
For example, LFP battery cells used in our energy storage systems are still supplied exclusively by two vendors located in China. While we are actively exploring alternative suppliers outside of China, the global supply chain for LFP battery cells remains heavily concentrated in China, and identifying qualified suppliers with the necessary expertise and capacity remains challenging.
Current report
An escalation in trade tensions or the implementation of broader tariffs, trade restrictions or retaliatory measures on our products or components originating from countries outside the United States could adversely impact our ability to source necessary components, manufacture products at competitive cost, or sell our products at prices customers are willing to pay. Any such developments could materially and adversely affect our business operations, results of operations and cash flows.
Current report
Safe Harbor Agreements. During the year ended December 31, 2025, we entered into multiple safe harbor agreements with customers, including solar and battery financing companies that offer TPO arrangements to homeowners, such as leases and power purchase agreements. These agreements reflect our increasing engagement in the TPO segment, which we expect to be an important growth channel for U.S. residential solar and battery adoption following the expiration of the ITC available under Section 25D of the Code on December 31, 2025. The timing and structure of these safe harbor transactions have resulted in higher variability in our quarterly revenue recognition and overall financial performance.
Current report
Demand for Products. The prolonged softness in demand in the solar industry has continued to adversely impact certain distributors and installers, contributing to reduced liquidity, bankruptcies and business closures across the channel. These disruptions have negatively affected our revenue and profitability and could result in higher allowances for credit losses in the future. In Europe, the overall business environment across the region is still challenging, and is expected to remain constrained in 2026. In the United States, uncertainty related to changes in legislation, including from the OBBBA, which eliminates or reduces existing tax credits for clean energy programs, as well as evolving U.S. trade and tariff policies, may further contribute to market volatility and adversely impact customer demand for our products, pricing and our financial performance.
Current report
Net revenues in the United States were $1,188.7 million in the year ended December 31, 2025, as compared to $934.7 million in the same period in 2024, an increase of $254.0 million, or 27%, primarily driven by higher demand and $91.2 million of microinverter shipments that are associated with safe harbor transactions with customers.
Current report
Net revenues from international markets were $284.3 million in the year ended December 31, 2025, as compared to $395.7 million in the same period in 2024, a decrease of $111.4 million, or 28%, primarily driven by continued softening in demand from customers in Europe, which was impacted by overall slower economic growth in Europe in addition to changes in government policies and lower utility rates.
Current report
Cost of revenues increased by $84.7 million, or 12%, for the year ended December 31, 2025, as compared to the same period in 2024. This increase was primarily driven by increased MWh of IQ Batteries shipped, higher tariffs and indirect manufacturing costs. This increase in cost of revenues was partially offset by benefits recognized from tax credits under the AMPTC for U.S. manufactured microinverters and IQ Batteries MWh shipped to customers. The AMPTC benefits recognized were $238.7 million for the year ended December 31, 2025, as compared to $157.5 million for the same period in 2024.
Current report
Gross margin decreased by 0.7 percentage points in the year ended December 31, 2025, as compared to the same period in 2024. The decrease was primarily due to product mix and increased tariff costs, partially offset by the recognition of a 16.2 percentage point AMPTC benefit in the year ended December 31, 2025, as compared to a 11.8 percentage point AMPTC benefit in the same period in 2024, due to a higher proportion of sales from U.S. manufactured microinverters and IQ Battery MWh shipped.
Current report
General and administrative expense increased by $4.9 million, or 4%, in the year ended December 31, 2025, as compared to the same period in 2024. The increase was primarily due to a $3.5 million increase in higher personnel-related expenses due to our bonus program and stock-based compensation and $1.4 million higher legal and other professional services.
Current report
Interest income of $62.7 million decreased in the year ended December 31, 2025, as compared to $77.3 million in the year ended December 31, 2024, primarily due to lower average cash, cash equivalents and marketable securities, and lower interest rates.
Removed paragraphs (9)
Previous report
During the fiscal year 2024, our priorities included providing great customer service, scaling business processes, increasing efficiencies, reducing operating costs and the ongoing development of hardware and software to enhance our Enphase Energy System offering. Quality, customer service and innovation are cornerstones of our strategy, and we believe our focus on these priorities will continue to help drive our success going forward.
Previous report
We also expanded deployments of our IQ8 series Microinverters into many new regions globally, including shipments of IQ8 Microinverters with higher peak output AC power to support newer, high-powered solar modules. We began shipping our third-generation Enphase Energy System with IQ Battery 5P in several new markets globally. We also launched IQ Battery 5P in India with the IQ System Controller, enabling backup power in a region with frequent outages.
Previous report
Demand for Products. The demand environment for our products experienced a broad-based slowdown beginning in the second quarter of 2023 in the United States and in the third quarter of 2023 in Europe that continued into 2024. This demand environment has negatively impacted several distributors and installers, resulting in reduced liquidity, bankruptcy and business closures, which has affected our revenue and profitability, days sales outstanding and allowances for credit losses. The slower demand environment also resulted in elevated inventory with distributors and installers in late 2023 and the first half of 2024, and as a result we sold fewer microinverters to distributors and installers during the year ended December 31, 2024 compared to the same period in 2023.
Previous report
In the United States, this slowdown was primarily the result of higher interest rates, high channel inventory and the transition from NEM 2.0 to NEM 3.0 in California. Higher interest rates resulted in larger monthly costs and longer pay-back periods for those customers who financed their systems. In Europe, this slowdown was primarily driven by a softer customer demand as utility rates dropped and policy changes were implemented. This resulted in oversupply, financial stresses throughout the industry and the resulting channel inventory correction. In addition, there has been increased uncertainty in NEM policies and solar export penalties in a key European market. The phase out of NEM in that market was ultimately not approved but solar export penalties are still causing uncertainty among consumers. While we believe we have made the appropriate corrections to our channel inventory, some of the foregoing trends in the United States and Europe could continue to have an adverse effect on our results of operations in 2025.
Previous report
The overall decrease in net revenues during the year ended December 31, 2024, as compared to the same period in 2023, was due to a broad-based slowdown that began in 2023 in both the United States and Europe. This resulted in elevated inventory with distributors and installers, and as a result we sold fewer microinverters to distributors and installers during the year ended December 31, 2024 to normalize channel inventory, as compared to the same period in 2023. In the United States, this slowdown was primarily the result of higher interest rates, high channel inventory and the transition from NEM 2.0 to NEM 3.0 in California. Higher interest rates resulted in larger monthly costs and longer pay-back periods for those customers who financed their systems. In Europe, this slowdown was primarily driven by a softer customer demand as utility rates dropped and policy changes were implemented. This resulted in oversupply, financial stresses throughout the industry and the resulting channel inventory correction.
Previous report
Cost of revenues decreased by $531.2 million, or 43%, in the year ended December 31, 2024, as compared to the same period in 2023, primarily due to the lower volume of microinverter units sold, as well as from the benefit recognized from tax credits of $157.5 million under the AMPTC for U.S. manufactured microinverters shipped to customers in the year ended December 31, 2024, as compared to cost of revenues of $53.5 million in the same period in 2023. The benefit recognized from the AMPTC was partially offset by $38.3 million and $11.6 million of incremental cost for manufacturing in the United States in the year ended December 31, 2024 and December 31, 2023, respectively, thereby providing a Net IRA benefit of $119.2 million and $41.9 million, respectively.
Previous report
Gross margin increased by 1.1 percentage points in the year ended December 31, 2024, as compared to the same period in 2023. The increase was primarily due to recognition of a 9.0 percentage point of Net IRA benefit in the year ended December 31, 2024, as compared to a 1.8 percentage point Net IRA benefit in the same period in 2023, and an increase in ASP for microinverters, partially offset by product mix and relatively higher fixed overhead costs.
Previous report
General and administrative expense decreased by $7.0 million, or 5%, in the year ended December 31, 2024, as compared to the same period in 2023. The decrease was primarily due to actions implemented in connection with the restructuring initiatives implemented in 2023 and 2024 that lowered professional services and facilities expense by $4.8 million and lowered personnel-related costs by $2.2 million due to a reduction in headcount.
Previous report
Interest income of $77.3 million increased in the year ended December 31, 2024, as compared to $69.7 million for the year ended December 31, 2023, primarily due to higher interest rates.
Reworded paragraphs (39)
Previous wording
We are a global energy technology company. We deliver smart, easy-to-use solutions that manage solar generation, storage and communication on one platform. Our intelligent microinverters work with virtually every solar panel made, and when paired with our smart technology, result in one of the industry’s best-performing clean energy systems. As of December 31, 2024, we have shipped approximately 80.0 million microinverters, and approximately 4.7 million Enphase residential and commercial systems have been deployed in more than 160 countries.
Current wording
We are a global energy technology company. We deliver smart, easy-to-use solutions that manage solar generation, storage and communication on one platform. Our intelligent microinverters work with virtually every solar panel made, and when paired with our smart technology, result in one of the industry’s best-performing clean energy systems. As of December 31, 2025, we have shipped approximately 86.4 million microinverters, and more than 5.1 million Enphase residential and commercial systems have been deployed in over 160 countries.
Previous wording
We sell primarily to solar distributors who combine our products with others, including solar module products and racking systems, and resell to installers in each target region. In addition to our solar distributors, we sell directly to select large installers, OEMs and strategic partners. Our OEM customers include solar module manufacturers who integrate our microinverters with their solar module products and resell to both distributors and installers. Strategic partners include providers of solar financing solutions. We also sell certain products and services to homeowners primarily in support of our warranty services and legacy product upgrade programs, via our online store.
Current wording
We sell primarily to solar distributors who combine our products with others, including solar module products and racking systems, and resell to installers in each target region. In addition to our solar distributors, we sell directly to select large installers, OEMs and strategic partners. Our OEM customers include solar module manufacturers who integrate our microinverters with their solar module products and resell to both distributors and installers. Strategic partners includea variety of companies, including industrial equipment suppliers, module companies, energy suppliers and developers of third-party solar finance offerings (such as TPOs). We also sell certain products and services to homeowners primarily in support of our warranty services and legacy product upgrade programs, via our online store.
Previous wording
To reduce supply chain risk and take advantage of new incentives for domestic manufacturing, we expanded our operations with contract manufacturers in the United States with a capacity to produce five million microinverters per quarter. Beginning in the second half of 2024, we began shipping residential and commercial microinverters, and batteries, with higher domestic content from our U.S. contract manufacturers, which are expected to help certain solar and battery projects qualify for the domestic content bonus tax credit. The domestic content bonus tax credit is only available to commercial asset owners, which includes commercial businesses adding solar and PPA/lease providers who own residential solar projects.
Current wording
To mitigate supply chain risks and tariff exposure and to leverage U.S. manufacturing incentives, we continued to operate our domestic manufacturing footprint, including our in‑house manufacturing facility and our partnership with Flex. These arrangements maintained a combined manufacturing capacity of approximately five-million microinverters per quarter. Beginning in the second half of 2024, we began shipping residential and commercial microinverters and batteries with higher domestic content from U.S. manufacturing facilities, which are expected to help certain solar and battery projects qualify for the domestic content bonus tax credit. The domestic content bonus tax credit is only available to commercial asset owners, which includes commercial businesses adding solar and power purchase agreements/lease providers who own residential solar projects.
Previous wording
Global Events Affecting our Business and Operations
Current wording
Events Affecting our Business and Operations
Previous wording
We generate revenue from sale of our various solutions, which include microinverter units and related accessories, IQ Battery and related accessories, IQ PowerPack 1500 and related accessories, IQ Gateway and IQ Energy Router, cloud-based monitoring services, EV charging solutions, design, proposal, permitting, installation and lead generation services, as well as a platform matching cleantech asset owners to a local and on-demand workforce of service providers, distributors, large installers, OEMs and strategic partners.
Current wording
We generate revenue from the sale of our various products, which include microinverter units and related accessories, IQ Battery and related accessories, IQ PowerPack 1500 and related accessories, EV charging solutions, IQ Combiner, IQ Gateway and IQ Energy Router, as well as from the sale of services, which include cloud-based monitoring services, design, proposal, permitting, installation and solar appointment generation services, and Enphase Care services.
Previous wording
Our revenue is affected by changes in the volume and average selling prices (“ASPs”) of our various solutions and related accessories, supply and demand, sales incentives, government incentives and competitive product offerings. Our revenue growth is dependent on our ability to compete effectively in the marketplace by remaining cost competitive, macroeconomic conditions, favorable regulatory environment, developing and introducing new products that meet the changing technology, and performance requirements of our customers, the diversification and expansion of our revenue base, and our ability to market our products in a manner that increases awareness for microinverter technology and differentiates us in the marketplace.
Current wording
Our revenue is affected by changes in the volume and ASPs of our various solutions and related accessories, supply and demand, sales incentives, government incentives and competitive product offerings. Our revenue growth is dependent on our ability to compete effectively in the marketplace by remaining cost competitive, macroeconomic conditions, favorable regulatory environment, developing and introducing new products that meet the changing technology and the performance requirements of our customers, the diversification and expansion of our revenue base, and our ability to market our products in a manner that increases awareness for microinverter technology and differentiates us in the marketplace.
Previous wording
Cost of revenues is comprised primarily of product costs, warranty, manufacturing and installation services support personnel, logistics costs, freight costs, inventory write-downs, hosting services costs related to our cloud-based monitoring services, depreciation of manufacturing test equipment, amortization of capitalized software development costs related to our cloud-based monitoring services, lead acquisition costs and design and proposal services, employee-related expenses associated with proposal and permitting services and design and proposal service customer support. AMPTC earned under the IRA for U.S. manufactured microinverters shipped to customers in the years ended December 31, 2024 and 2023 are treated as a reduction to cost of revenues.
Current wording
Cost of revenues is comprised primarily of product costs, warranty, manufacturing and installation services, support personnel, logistics costs, freight costs, inventory write-downs, hosting services costs related to our cloud-based monitoring services, depreciation of manufacturing and test equipment, amortization of capitalized software development costs related to our cloud-based monitoring services, lead acquisition costs and design and proposal services, employee-related expenses associated with proposal and permitting services and design and proposal service customer support. AMPTC earned under the IRA for U.S. manufactured microinverters shipped to customers are treated as a reduction to cost of revenues.
Previous wording
Our product costs are impacted by technological innovations, such as advances in semiconductor integration and new product introductions, economies of scale resulting in lower component costs, and improvements in production processes and automation. Certain costs, primarily personnel and depreciation and amortization of test equipment and capitalized software development costs, are not directly affected by sales volume.
Current wording
Our product costs are impacted by technological innovations, such as advances in semiconductor integration and new product introductions, economies of scale resulting in lower component costs, and improvements in production processes and automation. Certain costs, primarily personnel and depreciation and amortization of equipment and capitalized software development costs, are not directly affected by sales volume.
Previous wording
We outsource our manufacturing to third-party contract manufacturers and generally negotiate product pricing with them on a quarterly basis. We believe our contract manufacturing partners have sufficient production capacity to meet the anticipated demand for our products for the foreseeable future. However, shortages in the supply of certain key raw materials could adversely affect our ability to meet customer demand for our products. We contract with third parties, including one of our contract manufacturers, to serve as our logistics providers by warehousing and delivering our products in the United States, Canada, Mexico, Europe, Australia, New Zealand, India, Brazil, the Philippines, Thailand, South Africa, and certain other Central American and Asian countries.
Current wording
We outsource some of our manufacturing to third-party contract manufacturers and generally negotiate product pricing with them on a quarterly basis. We believe our contract manufacturing partners have sufficient production capacity to meet the anticipated demand for our products for the foreseeable future. However, shortages in the supply of certain key raw materials could adversely affect our ability to meet customer demand for our products. We contract with third parties, including one of our contract manufacturers, to serve as our logistics providers by warehousing and delivering our products in the United States, Canada, Mexico, Europe, Australia, New Zealand, India, Brazil, the Philippines, Thailand, South Africa, and certain other Central American and Asian countries.
Previous wording
Sales and marketing expense includes personnel-related expenses, travel, trade shows, marketing, customer support and other indirect costs. We expect to continue to make the necessary investments to enable us to execute our strategy to increase our market penetration geographically and enter into new markets by expanding our customer base of distributors, large installers, OEMs and strategic partners. We currently offer solutions targeting the residential and commercial markets in the United States, Canada, Mexico, Europe, Australia, New Zealand, India, Brazil, the Philippines, Thailand, South Africa, Central America, the Caribbean and certain Asian countries. We expect to continue to expand the geographic reach of our product offerings and explore new sales channels in addressable markets in the future.
Current wording
Sales and marketing expense includes personnel-related expenses, travel, trade shows, marketing, customer support and other indirect costs. We expect to continue to make the necessary investments to enable us to execute our strategy to increase our market penetration geographically and enter into new markets by expanding our customer base of distributors, large installers, OEMs and strategic partners. We currently offer solutions targeting the residential and commercial markets in the United States, Canada, Mexico, Puerto Rico, Europe, Australia, New Zealand, India, Thailand, Central America, the Caribbean and certain Asian countries. We expect to continue to expand the geographic reach of our product offerings and explore new sales channels in addressable markets in the future.
Previous wording
General and administrative expense includes personnel-related expenses for our executive, finance, human resources, information technology and legal organizations, facilities costs, and fees for professional services. Fees for professional services consist primarily of outside legal, accounting and information technology consulting costs.
Current wording
General and administrative expense includes personnel-related expenses for our executive, finance, human resources, information technology and legal organizations, facilities costs, and fees for professional services. Fees for professional services consist primarily of external legal, accounting and information technology consulting costs.
Previous wording
Other income, net primarily consists of interest income on our cash, cash equivalents, restricted cash and marketable securities, amortization of discount or premium on purchase of cash equivalents and marketable securities, gains or losses upon conversion of foreign currency transactions into U.S. dollars, interest expense, changes in fair value of contingent consideration, non-cash interest expense related to the accretion of debt discount and amortization of deferred financing costs, non-cash charges recognized for loss on partial settlement of convertible notes, and the change in fair value of our debt securities.
Current wording
Other income, net, primarily consists of interest income on our cash, cash equivalents, restricted cash and marketable securities, amortization of discount or premium on purchase of cash equivalents and marketable securities, gains or losses upon conversion of foreign currency transactions into U.S. dollars, interest expense, changes in fair value of contingent consideration, non-cash interest expense related to the accretion of debt discount and amortization of deferred financing costs, non-cash charges recognized for loss on partial settlement of convertible notes, and the change in fair value of our debt investment in public and private companies.
Previous wording
Net revenues decreased by $960.4 million, or 42%, in the year ended December 31, 2024, as compared to the same period in 2023, driven primarily by a 58% decrease in microinverter units shipped, partially offset by an increase in ASP for our microinverters as we sold more IQ8 microinverters relative to IQ7 microinverters. During the year ended December 31, 2024, we sold approximately 6.5 million microinverter units, as compared to approximately 15.5 million microinverter units in the year ended December 31, 2023. The decrease in net revenues was also partially offset by a 48% increase in IQ Batteries MWh shipped. During the year ended December 31, 2024, we shipped 521.0 MWh of IQ Batteries, as compared to 351.6 MWh shipped in the year ended December 31, 2023.
Current wording
Net revenues increased by $142.6 million, or 11%, in the year ended December 31, 2025, as compared to the same period in 2024, driven primarily by a 36% increase in IQ Batteries MWh shipped, partially offset by a 2% decrease in microinverter units sold. During the year ended December 31, 2025, we sold approximately 6.4 million microinverter units and shipped 706.1 MWh of IQ Batteries, as compared to approximately 6.5 million microinverter units and 521 MWh of IQ Batteries shipped in the year ended December 31, 2024.
Previous wording
Research and development expense decreased by $26.0 million, or 11%, in the year ended December 31, 2024, as compared to the same period in 2023. The decrease was primarily due to actions implemented in connection with the restructuring initiatives implemented in 2023 and 2024 that lowered personnel-related expenses by $16.2 million due to a reduction in headcount and lowered equipment and professional services costs by $9.8 million. The amount of research and development expenses may fluctuate from period to period due to the differing levels and stages of development activity for our products.
Current wording
Research and development expense decreased by $12.2 million, or 6%, in the year ended December 31, 2025, as compared to the same period in 2024. The decrease was primarily due to actions in connection with the restructuring initiatives implemented at the end of 2024 that lowered personnel-related expenses due to a reduction in headcount by $7.7 million and lowered equipment, supplies and professional services costs by $4.6 million. The amount of research and development expenses may fluctuate from period to period due to the differing levels and stages of development activity for our products.
Previous wording
Sales and marketing expense decreased by $25.2 million, or 11%, in the year ended December 31, 2024, as compared to the same period in 2023. The decrease was primarily due to actions implemented in connection with the restructuring initiatives implemented in 2023 and 2024 that lowered professional services and advertising costs by $14.6 million and personnel-related expenses by $10.6 million due to a reduction in headcount.
Current wording
Sales and marketing expense decreased by $9.0 million, or 4%, in the year ended December 31, 2025, as compared to the same period in 2024. The decrease was primarily due to actions in connection with the restructuring initiatives implemented at the end of 2024 that lowered personnel-related expenses by $2.8 million as a result of moving certain functions to cost efficient regions and leveraging advanced artificial intelligence tools, lowered professional services by $3.2 million and other sales and marketing operating expenses by $3.0 million.
Previous wording
Restructuring and asset impairment charges are the net charges resulting from restructuring initiatives implemented in 2023 and 2024 to increase operational efficiencies, reduce operating costs, and to better align our workforce and cost structure with current market conditions, our business needs, and strategic priorities. Restructuring charges of $13.2 million in the year ended December 31, 2024, primarily consisted of $6.4 million of employee severance, one-time benefits and other employee related expenses, $2.0 million of contract termination charges and $4.8 million of asset impairment charges. Restructuring charges of $15.7 million in the year ended December 31, 2023, primarily consisted of $9.8 million of asset impairment charges, $3.7 million of contract termination charges, $1.4 million of employee severance and one-time benefits, and $0.8 million of other restructuring charges.
Current wording
Restructuring and asset impairment charges of $7.1 million in the year ended December 31, 2025, primarily consisted of $5.2 million of employee related expenses, $1.7 million of asset impairment charges and $0.2 million of contract termination charges. Restructuring and asset impairment charges of $13.2 million the year ended December 31, 2024, primarily consisted of $6.4 million of employee severance, one-time benefits and other employee related expenses, $2.0 million of contract termination charges and $4.8 million of asset impairment charges.
Previous wording
Interest expense of $8.9 million in the year ended December 31, 2024, primarily included $8.9 million for the coupon interest, debt discount amortization with the Notes due 2025, and amortization of debt issuance costs with the Notes due 2025, Notes due 2026 and Notes due 2028. Interest expense of $8.8 million in the year ended December 31, 2023, primarily related to $8.4 million for the coupon interest, debt discount amortization with the Notes due 2025 and amortization of debt issuance costs with the $65.0 million aggregate principal amount of our 4.0% convertible senior notes due 2023 (the “Notes due 2023”), Notes due 2025, Notes due 2026 and Notes due 2028, and $0.4 million interest incurred with the Notes due 2025 and Notes due 2023.
Current wording
Interest expense of $4.5 million in the year ended December 31, 2025 primarily included $4.5 million for the coupon interest, debt discount amortization with our 0.25% convertible senior notes due 2025 (the “Notes due 2025”), and amortization of debt issuance costs with the Notes due 2025, Notes due 2026 and Notes due 2028 and other interest. Interest expense of $8.9 million in the year ended December 31, 2024, primarily included $8.9 million for the coupon interest, debt discount amortization with the Notes due 2025, and amortization of debt issuance costs with the Notes due 2025, Notes due 2026 and Notes due 2028.
Previous wording
Other expense, net, of $25.5 million in the year ended December 31, 2024, primarily related to $23.0 million impairment of investments in private companies, $5.0 million net loss due to foreign currency denominated monetary assets and liabilities partially offset by a $2.0 million non-cash net gain related to change in the fair value of debt securities, $0.3 million of miscellaneous other income and $0.2 million realized gain from sale of marketable securities. Other income, net, of $6.5 million in the year ended December 31, 2023, primarily related to a $8.7 million non-cash net gain related to change in the fair value of debt securities, partially offset by a $2.1 million net loss due to foreign currency denominated monetary assets and liabilities and $0.1 million in realized loss on investments.
Current wording
Other expense, net, of $10.9 million in the year ended December 31, 2025 primarily consisted of $9.8 million non-cash expense related to change in the fair value of debt securities, $1.0 million net loss due to foreign currency denominated monetary assets and liabilities and $0.2 million change in the fair value of our tax equity fund investment, partially offset by $0.1 million realized gain from sale of marketable securities. Other expense, net, of $25.5 million in the year ended December 31, 2024 primarily related to $23.0 million impairment of investments in private companies and $5.0 million net loss due to foreign currency denominated monetary assets and liabilities, partially offset by a $2.0 million non-cash net gain related to change in the fair value of debt securities, $0.3 million of miscellaneous other income and $0.2 million realized gain from sale of marketable securities.
Previous wording
The income tax provision was $17.5 million in the year ended December 31, 2024, as compared to an income tax provision of $74.2 million in the same period in 2023. The decrease was primarily due to lower projected tax expense as our operations in U.S. and foreign jurisdictions were less profitable in 2024 as compared to the same period in 2023, partially offset by an increase in tax expense from equity compensation shortfalls in 2024 as compared to the same period in 2023.
Current wording
The income tax provision was $32.7 million in the year ended December 31, 2025, as compared to $17.5 million in the same period in 2024. The increase was primarily due to higher projected tax expense as our operations in U.S. and foreign jurisdictions were more profitable in 2025, an increase in tax expense from equity compensation shortfalls in 2025, and prior year true up adjustments in 2025, as compared to the same period in 2024.
Previous wording
As of December 31, 2024, we had $1.7 billion in net working capital, including cash, cash equivalents, restricted cash and marketable securities, of which approximately $1.6 billion were held in the United States. Our cash, cash equivalents, restricted cash and marketable securities primarily consist of U.S. Government agency securities and treasuries, money market mutual funds, corporate notes, commercial paper and bonds, and both interest-bearing and non-interest-bearing deposits, with the remainder held in various foreign subsidiaries. We consider amounts held outside the United States to be accessible and have provided for the estimated withholding tax liability on the repatriation of our foreign earnings.
Current wording
As of December 31, 2025, we had $1.3 billion in net working capital, including cash, cash equivalents and marketable securities of approximately $1.5 billion, of which approximately $1.4 billion were held in the United States. Our cash, cash equivalents and marketable securities primarily consist of U.S. Government agency securities and treasuries, money market mutual funds, corporate notes and bonds, commercial paper and certificate of deposit, and both interest-bearing and non-interest-bearing deposits, with the remainder held in various foreign subsidiaries. We consider amounts held outside the United States to be accessible and have provided for the estimated withholding tax liability on the repatriation of our foreign earnings.
Previous wording
Our cash, cash equivalents, restricted cash and marketable securities increased by $22.6 million for the year ended December 31, 2024, as compared to the same period in 2023, primarily due to cash generated from operations of $513.7 million, partially offset by $391.4 million in repurchases of common stock pursuant to the 2023 Repurchase Program and $78.8 million in payments of withholding taxes related to net share settlement of employee equity awards.
Current wording
Our cash, cash equivalents and marketable securities decreased by $204.7 million from December 31, 2024 to December 31, 2025, primarily due to repurchases of common stock pursuant to our share repurchase program, payoff of the Notes due 2025, investments in private and public companies, issuance of loan receivables and payments of withholding taxes related to net share settlement of equity awards, partially offset by cash generated from operations.
Previous wording
Total carrying amount of debt increased by $8.6 million for the year ended December 31, 2024, as compared to the same period in 2023, primarily due to accretion of debt discount and issuance costs.
Current wording
Total carrying amount of debt decreased by $98.0 million from December 31, 2024 to December 31, 2025, primarily due to the payoff of the Notes due 2025, partially offset by accretion of issuance costs.
Previous wording
We expect that our principal short-term (over the next 12 months) cash needs related to our operations will be to fund working capital, strategic investments, acquisitions, repurchases of common stock and payments of withholding taxes for net share settlement of employee equity awards, payments on our outstanding debt and purchases of property and equipment. We plan to fund any cash requirements for the next 12 months from our existing cash, cash equivalents and marketable securities on hand, and cash generated from operations. For the long-term period (beyond 12 months), we aim to continue growing cash flows from operations to support our ongoing business operations and strategic investment plans. We regularly evaluate our liquidity position, debt obligations and expected cash requirements. As part of this ongoing assessment, we may pursue additional financing through the issuance of equity or the debt financing, as necessary, to meet our operational and investment needs. We anticipate that access to the debt market will be more limited compared to prior years as interest rates have increased and are expected to remain high. Our ability to obtain debt or any other additional financing that we may choose to, or need to, obtain will depend on, among other things, our development efforts, business plans, operating performance and the condition of the capital markets at the time we seek financing.
Current wording
We expect our principal short-term cash requirements (over the next 12 months) to include working capital, strategic investments, acquisitions, repurchases of common stock and payments of withholding taxes for net share settlement of employee equity awards, payments on our outstanding debt, and purchases of property and equipment. We plan to fund any cash requirements for the next 12 months from our existing cash, cash equivalents and marketable securities on hand, and cash generated from operations.
Previous wording
Repurchase of Common Stock. In July 2023, our board of directors authorized the 2023 Repurchase Program pursuant to which we were authorized to repurchase up to $1.0 billion of our common stock. The repurchases could be funded from available working capital and could be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. The program may be discontinued or amended at any time and expires on July 26, 2026. During the year ended December 31, 2024, we repurchased 4,543,016 shares, for an aggregate amount of $391.4 million. Refer to Note 15. “Stockholders’ Equity,” in Part II, Item 8 of this Annual Report on Form 10-K for more information on our repurchase of common stock.
Current wording
Repurchase of Common Stock. In July 2023, our board of directors authorized the 2023 Repurchase Program pursuant to which we were authorized to repurchase up to $1.0 billion of our common stock. The repurchases could be funded from available working capital and marketable securities, and could be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. The 2023 Repurchase Program may be discontinued or amended at any time and expires on July 26, 2026. As of December 31, 2025, we had approximately $268.7 million remaining for repurchase of shares under the 2023 Repurchase Program. For more information on the 2023 Repurchase Program, refer to Note 14. “Stockholders’ Equity,” in Part II, Item 8 of this Annual Report on Form 10-K for more information on our repurchase of common stock.
Previous wording
Convertible Notes. As of December 31, 2024, our aggregate principal convertible notes obligations were $1,309.7 million, which primarily consisted of the Notes due 2028 of $575.0 million, Notes due 2026 of $632.5 million and Notes due 2025 of $102.2 million. Upon conversion of the Notes due 2026 and Notes due 2028, we expect to pay cash equal to the aggregate principal amount of the Notes of such series to be converted, and, at our election, will pay or deliver cash and/or shares of our common stock for the amount of our conversion obligation in excess of the aggregate principal amount of the Notes of such series. Holders of Notes due 2025 may now convert their notes at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of March 1, 2025. These conversions will be settled in a combination settlement method with the principal value settled in cash and the remaining value in shares of our common stock. Refer to Note 13. “Debt,” in Part II, Item 8 of this Annual Report on Form 10-K for more information on our outstanding convertible notes.
Current wording
Convertible Notes. As of December 31, 2025, our aggregate principal convertible notes obligations were $1,207.5 million, which primarily consisted of the Notes due 2026 of $632.5 million and the Notes due 2028 of $575.0 million. Upon conversion of the Notes due 2026 and Notes due 2028, we expect to pay cash equal to the aggregate principal amount of the Notes of such series to be converted, and, at our election, will pay or deliver cash and/or shares of our common stock for the amount of our conversion obligation in excess of the aggregate principal amount of the Notes of such series. Holders of the Notes due 2026 may now convert their notes at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of March 1, 2026. These conversions will be settled in a combination settlement method with the principal value settled in cash and the remaining value in shares of our common stock. For more information on our convertible notes, refer to Note 12. “Debt,” in Part II, Item 8 of this Annual Report on Form 10-K for more information on our outstanding convertible notes.
Previous wording
Operating Leases. We have entered into various non-cancelable operating leases primarily for our facilities with original lease periods expiring through the year 2033, with the most significant leases relating to our offices in Petaluma, California and Bengaluru, India. As of December 31, 2024, we had total operating lease obligations of $28.9 million recorded on our consolidated balance sheet.
Current wording
Operating Leases. We have entered into various non-cancelable operating leases primarily for our facilities with original lease periods expiring through the year 2033, with the most significant leases relating to our offices in Petaluma, California, Arlington, Texas and Bengaluru, India. As of December 31, 2025, we had total operating lease obligations of $39.4 million recorded on our consolidated balance sheet.
Previous wording
Other Material Cash Requirements. As of December 31, 2024, we had open purchase obligations of $130.9 million related to component inventory that our primary contract manufacturers procure on our behalf in accordance with our production forecast as well as other inventory related purchase commitments. The timing of purchases in future periods could differ materially from estimates presented above due to fluctuations in demand requirements related to varying sales levels as well as changes in economic conditions.
Current wording
Other Material Cash Requirements. As of December 31, 2025, we had open purchase obligations of $252.3 million related to component inventory that we and our primary contract manufacturers procure on our behalf in accordance with our production forecast as well as other inventory related purchase commitments. The timing of purchases in future periods could differ materially from estimates presented above due to fluctuations in demand requirements related to varying sales levels as well as changes in economic conditions.
Previous wording
Cash flows from operating activities consisted of our net income adjusted for certain non-cash reconciling items, such as stock-based compensation expense, non-cash interest expense, change in the fair value of debt securities, deferred income taxes, asset impairment, depreciation and amortization, and changes in our operating assets and liabilities. Net cash provided by operating activities decreased by $183.1 million for the year ended December 31, 2024, as compared to the same period in 2023, primarily due to lower net revenues.
Current wording
Cash flows from operating activities consisted of our net income adjusted for certain non-cash reconciling items, such as stock-based compensation expense, asset impairment, non-cash interest expense, change in the fair value of debt securities, deferred income taxes, depreciation and amortization, amortization (accretion) of premium (discount) on marketable securities, benefit from lease termination, provision for credit losses, and changes in our operating assets and liabilities. Net cash provided by operating activities decreased by $377.2 million for the year ended December 31, 2025, as compared to the same period in 2024, primarily due to unfavorable changes in working capital. The decrease was driven principally by higher cash outflows related to prepaid income tax of $243.0 million, increase in inventory of $123.0 million, increase in grant receivable of $61.5 million, and decrease in deferred revenues of $60.8 million, reflecting changes in inventory positioning, the timing of customer prepayments and other operating assets. These working capital uses were partially offset by higher cash inflows from accounts payable, accrued expenses and other current liabilities. In addition, cash flows from operating activities benefited from higher net income in 2025 compared to 2024; however, this favorable impact was more than offset by the net working capital outflows described above.
Previous wording
For the year ended December 31, 2023, net cash used in investing activities of $366.4 million was primarily from the purchase of $241.0 million of marketable securities, net of sale and maturities, $110.4 million used in purchases of test and assembly equipment to expand our supply capacity, related facility improvements and information technology enhancements, including capitalized costs related to internal-use software, and $15.0 million used in the investment of a private company.
Current wording
For the year ended December 31, 2025, net cash provided by investing activities of $106.8 million was primarily from the maturities of $217.0 million of marketable securities, net of purchases, partially offset by $48.5 million issuance of loan receivables to private companies, $40.6 million used in purchases of test and assembly equipment for U.S. manufacturing related facility improvements and information technology enhancements, including capitalized costs related to internal-use software, $9.8 million used in investment in a tax equity fund, $6.3 million used for an investment in debt security and $5.0 million used for investment in equity of a private company.
Previous wording
For the year ended December 31, 2023, net cash used in financing activities of approximately $516.8 million was primarily from $410.0 million used to repurchase our common stock and the payment of $120.6 million in employee withholding taxes related to net share settlement of employee equity awards, partially offset by $13.9 million net proceeds from employee stock option exercises and purchases under our employee stock purchase plan.
Current wording
For the year ended December 31, 2025, net cash used in financing activities of approximately $241.6 million was primarily from payment of $130.0 million used to repurchase our common stock under the 2023 Repurchase Program, $102.2 million towards the settlement of the Notes due 2025, and payment of $18.0 million in employee withholding taxes related to net share settlement of employee equity awards, partially offset by $8.5 million of net proceeds from purchases under our employee stock purchase plan.
Previous wording
We generate revenues from sales of our solutions, which include microinverter units and related accessories, IQ Battery and related accessories, IQ PowerPack 1500 and related accessories, IQ Combiner, IQ Gateway, and IQ Energy Router, our cloud-based monitoring services, EV charging solutions, design, proposal, permitting, installation and lead generation services, as well as a platform matching cleantech asset owners to a local and on-demand workforce of service providers, distributors, large installers, OEMs and strategic partners.
Current wording
We generate revenue from the sale of our various products, which include microinverter units and related accessories, IQ Battery and related accessories, IQ PowerPack 1500 and related accessories, EV charging solutions, IQ Combiner, IQ Gateway and IQ Energy Router, as well as from the sale of services, which include cloud-based monitoring services, design, proposal, permitting, installation and solar appointment generation services, and Enphase Care services.
Previous wording
•Products Delivered at a Point in Time. We sell our products and professional services to customers in accordance with the terms of the related customer contracts. We generate revenues from sales of our solutions, which include microinverter units and related accessories, storage solutions, EV charging solutions, design, proposal, permitting, installation and lead generation services, as well as a platform matching cleantech asset owners to a local and on-demand workforce of service providers to distributors, large installers, OEMs and strategic partners. Microinverter units, microinverter accessories, storage and EV solutions, design proposal, permitting, installation and lead generation services, as well as completed work orders on our platform matching cleantech asset owners to a local and on-demand workforce of service providers, are delivered to customers at a point in time, and we recognize revenue for these products or professional services when we transfer control of the product or professional services to the customer, which is generally upon product shipment or service delivery, respectively.
Current wording
•Products Delivered at a Point in Time. We sell our products and professional services to customers in accordance with the terms of the related customer contracts. We generate revenues from sales of our solutions, which include microinverter units and related accessories, storage solutions, EV charging solutions, and design, proposal, permitting, installation and solar appointment services. Such microinverter units, microinverter accessories, storage and EV solutions, design proposal, permitting, installation and solar appointment services are delivered to customers at a point in time, and we recognize revenue for these products or professional services when we transfer control of the product or professional services to the customer, which is generally upon product shipment or service delivery, respectively.
Previous wording
•Products Delivered Over Time. The sale of IQ Gateway and IQ Energy Router includes our cloud-based monitoring services. The full consideration for these products represents a single performance obligation and is deferred at the sale date and recognized over the estimated service period of 7 years. We also sell certain communication accessories that contain a service performance obligation to be delivered over time. The revenue from these products is recognized over the related service period, which is typically 5 years. The subscription services revenue generated from each customer’s subscription to our design and proposal service is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. The subscription contracts are generally 3 to 12 months in length and billed in advance.
Current wording
•Products Delivered Over Time. The sale of IQ Gateway and IQ Energy Router includes our cloud-based monitoring services. The full consideration for these products represents a single performance obligation and is deferred at the sale date and recognized over the estimated service period of 7 and 15 years. We also sell certain communication accessories that contain a service performance obligation to be delivered over time. The revenue from these products is recognized over the related service period, which is typically 5 years. The subscription services revenue generated from each customer’s subscription to our design and proposal service is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. The subscription contracts are generally 3 to 12 months in length and billed in advance. The Enphase Care service plans are offered as either an annual plan or a 10-year prepaid plan and pricing is customized based on the customer’s site and system configuration.
Previous wording
Inventory is valued at the lower of cost or market. Market is current replacement cost (by purchase or by reproduction, dependent on the type of inventory). In cases where market exceeds net realizable value (i.e., estimated selling price less reasonably predictable costs of completion and disposal), inventories are stated at net realizable value. Market is not considered to be less than net realizable value reduced by an allowance for an approximately normal profit margin. We determine cost on a first-in first-out basis. Certain factors could affect the realizable value of its inventory, including customer demand and market conditions. Management assesses the valuation on a quarterly basis and writes down the value for any excess and obsolete inventory based upon expected demand, anticipated sales price, effect of new product introductions, product obsolescence, customer concentrations, product merchantability and other factors. Inventory write-downs are equal to the difference between the cost of inventories and market.
Current wording
Inventory is valued at the lower of cost or market. Market is current replacement cost (by purchase or by reproduction, dependent on the type of inventory). In cases where market exceeds net realizable value (i.e., estimated selling price less reasonably predictable costs of completion and disposal), inventories are stated at net realizable value. Market is not considered to be less than net realizable value reduced by an allowance for an approximately normal profit margin. We determine cost on a first-in first-out basis and include both the costs of acquisition and manufacturing in our inventory costs. These costs include direct materials, direct labor, and indirect manufacturing costs, including depreciation and amortization. The capitalization of indirect costs is based on the normal utilization of our manufacturing facility in Texas. If the manufacturing facility utilization is abnormally low, the portion of our indirect manufacturing costs related to the abnormal utilization level is expensed as incurred. Other abnormal manufacturing costs, such as wasted materials or excess yield losses, are also expensed as incurred.
Previous wording
Government grants represent benefits provided by federal, state or local governments that are not subject to the scope of ASC 740. We recognize a grant when we have reasonable assurance that we will comply with the grant’s conditions and that the grant will be received. Government grants that are not related to long-lived assets are considered income-based grants, which are recognized as a reduction to the related cost of activities that generated the benefit.
Current wording
Government grants represent benefits provided by federal, state or local governments that are not subject to the scope of Accounting Standards Codification 740. We recognize a grant when we have reasonable assurance that we will comply with the grant’s conditions and that the grant will be received. Government grants that are not related to long-lived assets are considered income-based grants, which are recognized as a reduction to the related cost of activities that generated the benefit.
Previous wording
We recognized credits under the AMPTC as a reduction to cost of revenues in the consolidated statement of operations for the microinverters manufactured in the United States and sold to customers in the year ended December 31, 2024 and 2023. Such credit is also reflected as an increase to prepaid income tax within prepaid expenses and other current assets and reduction of income tax payable within accrued liabilities on our consolidated balance sheets within accrued liabilities. There are currently several critical and complex aspects of the IRA that could affect the estimated benefits we have recognized and expect to recognize from the AMPTC. Any modifications to the law or its effects arising, for example, through (i) technical guidance and regulations from the IRS and U.S. Treasury Department, (ii) subsequent amendments to or interpretations of the law, and/or (iii) future laws or regulations rendering certain provisions of the IRA less effective or ineffective, in whole or in part, could result in material adverse changes to the benefits we have recognized and expect to recognize.
Current wording
We recognized credits under the AMPTC as a reduction to cost of revenues in the consolidated statements of operations for the microinverters manufactured in the United States and sold to customers. Such credit is also reflected as an increase to prepaid income tax within prepaid expenses and other current assets and reduction of income tax payable within accrued liabilities on our consolidated balance sheets within accrued liabilities. There are currently several critical and complex aspects of the IRA that could affect the estimated benefits we have recognized and expect to recognize from the AMPTC, such as compliance requirements under FEOC provisions establishing an escalating threshold of non-FEOC content that must be met by manufactured components produced beginning in 2026. Any modifications to the law or its effects arising, for example, through (i) technical guidance and regulations from the IRS and U.S. Treasury Department, (ii) subsequent amendments to or interpretations of the law, and/or (iii) future laws or regulations rendering certain provisions of the IRA less effective or ineffective, in whole or in part, could result in material adverse changes to the benefits we have recognized and expect to recognize.
Previous wording
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We have investments in debt securities categorized as level three in the fair value hierarchy based on inputs that are unobservable and significant to the overall fair value measurement totaling $64.8 million and $79.9 million as of December 31, 2024 and 2023, respectively, which is included in “Other assets” in the consolidated balance sheets.
Current wording
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We have investments categorized as level three in the fair value hierarchy based on inputs that are unobservable and significant to the overall fair value measurement totaling $60.8 million and $64.8 million as of December 31, 2025 and 2024, respectively, which is included in other assets in the consolidated balance sheets.
Previous wording
The carrying amounts of our cash, cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the short maturity of those instruments. Equity investments with readily determinable fair value are carried at fair value based on quoted market prices or estimated based on market conditions and risks existing at each balance sheet date. Equity investments without readily determinable fair value are measured at cost less impairment, and are adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer.
Current wording
The carrying amounts of our cash, cash equivalents, restricted cash, accounts receivable, loan receivables, accounts payable and accrued liabilities approximate fair value because of the short maturity of those instruments. Equity investments with readily determinable fair value are carried at fair value based on quoted market prices or estimated based on market conditions and risks existing at each balance sheet date. Equity investments without readily determinable fair value are measured at cost less impairment, and are adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer.
Previous wording
Our warranty accrual provides for the replacement of microinverter units, AC Battery storage solutions and related accessories, EV Chargers, IQ Gateway units and IQ Energy Router units that fail during the product’s warranty term. The warranty term related to microinverter units is 15 years for first and second generation microinverters and up to 25 years for subsequent generation microinverters. The warranty term for AC Battery storage solutions is 10 to 15 years depending on the generation and 5 years for IQ PowerPack 1500. The warranty term for the IQ Gateway and IQ Energy Router is 5 years, while the warranty term for EV Chargers is 1 to 5 years depending on the product. On a quarterly basis, we employ a consistent, systematic and rational methodology to assess the adequacy of our warranty liability. This assessment includes updating all key estimates and assumptions for each generation of product, based on historical results, trends and the most current data available as of the filing date. The key estimates and assumptions used in the warranty liability are thoroughly reviewed by management on a quarterly basis. The key estimates used by us to estimate our warranty liability are: (1) the number of units expected to fail and repaired or returned for replacement over time (i.e., return rate); and (2) the per unit cost of repair or replacement of units, including outbound shipping and limited labor costs, expected to be incurred to replace failed units over time (i.e., replacement cost).
Current wording
Our warranty accrual provides for the replacement of microinverter units, AC Battery storage solutions and related accessories, EV Chargers, IQ Gateway units and IQ Energy Router units that fail during the product’s warranty term. The warranty term related to microinverter units is 15 years for first and second generation microinverters and up to 25 years for subsequent generation microinverters. The warranty term for AC Battery storage solutions is 10 to 15 years depending on the generation and 5 years for IQ PowerPack 1500. The warranty term for the IQ Gateway is 5 to 15 years depending on the generation, for the IQ Energy Router is 5 years, and for EV Chargers is 1 to 5 years depending on the product. On a quarterly basis, we employ a consistent, systematic and rational methodology to assess the adequacy of our warranty liability. This assessment includes updating all key estimates and assumptions for each generation of product, based on historical results, trends and the most current data available as of the filing date. The key estimates and assumptions used in the warranty liability are thoroughly reviewed by management on a quarterly basis. The key estimates used by us to estimate our warranty liability are: (1) the number of units expected to fail and repaired or returned for replacement over time (i.e., return rate); and (2) the per unit cost of repair or replacement of units, including outbound shipping and limited labor costs, expected to be incurred to replace failed units over time (i.e., replacement cost).
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
For the long-term period (beyond 12 months), we plan to continue growing cash flows from operations to support our business operations and strategic investment plans. We regularly evaluate our liquidity position, debt obligations and anticipated cash needs. As part of this ongoing assessment, we may pursue additional financing through the issuance of equity or the debt financing, as necessary, to support our operational and investment needs.
Current report — wording carried from elsewhere
We anticipate that access to the debt market will be more constrained compared to prior periods due to elevated interest rates and recent policy changes to solar tax incentives following the enactment of the OBBBA. Our ability to secure debt or any other additional financing that we may choose to, or need to, obtain will depend on, various factors including our development efforts, business plans, operating performance and prevailing capital market conditions.
Current report — wording carried from elsewhere
Certain factors could affect the realizable value of its inventory, including customer demand and market conditions. Management assesses the valuation on a quarterly basis and writes down the value for any excess and obsolete inventory based upon expected demand, anticipated sales price, effect of new product introductions, product obsolescence, customer concentrations, product merchantability and other factors. Inventory write-downs are equal to the difference between the cost of inventories and market.