Enphase Energy, Inc.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Company generates revenue from the sale of its various products, which include microinverter units and related accessories, IQ Battery and related accessories, IQ PowerPack 1500 and related accessories, electric vehicle (“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.

Revenues are recognized when control of the promised goods or services are transferred to the Company’s customers in an amount that reflects the consideration that is expected to be received in exchange for those goods or services. The Company generates all of its revenues from contracts with its customers. A description of principal activities from which the Company generates revenues follows.

•Products Delivered at a Point in Time. The Company sells its products and professional services to customers in accordance with the terms of the related customer contracts. The Company generates revenues from sales of its 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 the Company recognizes revenue for these products or professional services when the Company transfers control of the product or professional services to the customer, which is generally upon product shipment or service delivery, respectively.

•Products Delivered Over Time. The sale of IQ Gateway and IQ Energy Router products includes the Company’s cloud-based monitoring service. 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. The Company also sells 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 the Company’s design and proposal software is recognized on a ratable basis over the contract term beginning on the date that the Company’s 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.

When the Company sells a product with more than one performance obligation, such as the IQ Combiner, which includes both hardware and IQ Gateway, the total consideration is allocated to these performance obligations based on their relative standalone selling prices.

The Company estimates and records certain revenue promotions as variable consideration and recognizes these promotions as a reduction in revenue at the time the related revenue is recorded.

The Company records upfront contract acquisition costs, such as sales commissions, to be capitalized and amortized over the estimated life of the asset. For contracts that have a duration of less than one year, the Company follows the Topic 606 practical expedient and expenses these costs when incurred. Commissions related to the Company’s sale of monitoring hardware and service are capitalized and amortized over the period of the associated revenue, which is 5 years to 7 years.

Refer to Note 3. “Revenue Recognition,” for additional information related to revenue recognition.

Cost of Revenues

The Company includes the following in cost of revenues: product costs, warranty, manufacturing and installation services personnel, logistics costs, freight costs, inventory write-downs, hosting services costs related to the Company’s cloud-based services, credits recognized from the advanced manufacturing production tax credit (“AMPTC”), depreciation of manufacturing and test equipment, and amortization of capitalized software development costs related to the Company’s cloud-based services, lead acquisition costs, design and proposal services, and employee-related expenses associated with proposal and permitting services and design and proposal service customer support. A description of principal activities from which the Company recognizes cost of revenue is as follows:

•Products Delivered at a Point in Time. Cost of revenue from these products is recognized when the Company transfers control of the product to the customer, which is generally upon shipment or service delivery.

•Products Delivered Over Time. Cost of revenue from these products is recognized over the related service period.

Government Grants

Government grants represent benefits provided by federal, state, or local governments that are not subject to the scope of Accounting Standards Codification (“ASC”) 740. The Company recognizes a grant when it has reasonable assurance that it 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.

In August 2022, the U.S. enacted the Inflation Reduction Act of 2022 (“IRA”), which includes credits under the AMPTC, to incentivize clean energy component sourcing and production, including for the production of microinverters. The IRA provides for an AMPTC on microinverters of 11 cents per alternating current watt basis. The AMPTC on microinverters decreases by 25% each year beginning in 2030 and ending after 2032. The Company recognized credits under 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 on the Company’s consolidated balance sheets within prepaid expenses and other current assets. For the years ended December 31, 2025 and 2024, benefits recognized from AMPTC of $238.7 million and $157.5 million, respectively, were recorded as a prepaid income tax of $227.5 million and $94.9 million (included in prepaid expenses and other current assets), respectively, and reduction of income tax payable of $11.2 million and $62.7 million (included in accrued liabilities), respectively, on the consolidated balance sheets, and as a reduction to cost of revenues of $238.7 million and $157.5 million on the consolidated statements of operations for the year ended December 31, 2025 and 2024, respectively. In addition, the Company recognized a grant receivable of $76.6 million and $15.1 million included in prepaid expenses and other current assets on the consolidated balance sheets as of December 31, 2025 and 2024, respectively, for inventory on hand because it has reasonable assurance that it will comply with the grant’s conditions and that the grant will be received when sold in the following 12 months, which is equal to the reduction of the carrying cost of the inventory on the consolidated balance sheets as of December 31, 2025 and 2024, respectively. Amounts recognized in the consolidated financial statements are based on management’s judgment and interpretation of the most current guidance.

Cash, Cash Equivalents and Marketable Securities

The Company classifies investments in marketable securities as available-for-sale investments and records these marketable securities at fair value. The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. All highly liquid investments with original maturities of 90 days or less from the date of purchase are classified as cash equivalents, while all others are presented within current assets since these investments represent funds available for current operations and the Company has the ability and intent, if necessary, to liquidate any of these investments within one year in order to meet liquidity needs or to grow the business, including for potential business acquisitions or other strategic transactions.

Marketable securities are recorded at fair value, with the unrealized gains or losses unrelated to credit loss factors included in accumulated other comprehensive income (loss), net of tax. Realized gains and losses and declines in value determined to be other than temporary based on the specific identification method are reported in other income (expense), net, in the consolidated statements of operations.

The Company periodically reviews whether the securities may be other-than-temporarily impaired, including whether or not (i) the Company has the intent to sell the security or (ii) it is more likely than not that the Company will be required to sell the security before its anticipated recovery. If one of these factors is met, the Company records an impairment loss associated with the impaired investment. The impairment loss will be recorded as a write-down of investments in the consolidated balance sheets and a realized loss within other income (expense), net in the consolidated statements of operations. There were no credit-related impairments recognized on the Company’s investments in marketable securities during the periods presented.

For purposes of identifying and measuring impairment, the policy election was made to exclude the applicable accrued interest from both the fair value and amortized cost basis. Applicable accrued interest of $9.7 million and $10.1 million, net of the allowance for credit losses, if any, is recorded inprepaid expenses and other current assets on the consolidated balance sheets as of December 31, 2025 and 2024, respectively.

Restricted Cash

Restricted cash represents cash held as certificates of deposit collateralized under a letter of credit issued to a customer through April 2025. The letter of credit was required as a performance security in a face amount equal to the aggregate purchase price of the executed sales agreement. The letter of credit was issued per the terms of the executed sales agreement and the Company collateralized certificates of deposit under this letter of credit in an amount of $95.0 million, which was reflected as restricted cash on the Company’s consolidated balance sheet as of December 31, 2024.

Fair Value of Financial Instruments

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. The financial instruments include the Company’s cash and cash equivalents, restricted cash, accounts receivable, loan receivables, accounts payable and accrued liabilities. The Company considers the carrying amount of short-term financial instruments to approximate the fair value because of the short maturity of those instruments. The Company’s long-term financial instruments are measured at amortized cost when the fair value option is not elected. The Company evaluates the allowance for credit losses by assessing the risks and losses inherent to the financial instruments.

Investments in Debt Securities

The Company elected the fair value option for its investments in convertible notes. These notes are measured at fair value on a recurring basis, with changes in fair value recognized in other expense, net, in the consolidated statements of operations.

Accounts Receivable and Contract Assets

The Company receives payments from customers based upon contractual payment terms. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets recorded in prepaid assets and other current assets on the consolidated balance sheet include deferred product costs and commissions associated with the deferred revenue and will be amortized along with the associated revenue.

Allowance for Credit Losses

The Company maintains allowances for credit losses for uncollectible accounts receivable. Management estimates anticipated credit losses based on days past due, customer specific experience, collection history, the financial health of customers, among other factors. Accounts receivable are recorded net of allowance for credit losses totaling $0.6 million and $7.8 million as of December 31, 2025 and December 31, 2024, respectively. The $7.8 million allowance for credit losses as of December 31, 2024 included $6.2 million related to a customer that filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code (“Chapter 11 bankruptcy”) during the year ended December 31, 2024 and $6.2 million was written-off during the year ended December 31, 2025. Management will continue to monitor certain customers experiencing considerable financial difficulties to perform collectability assessment and evaluate the impact to the Company's revenue recognition and allowance for credit losses on its financial statements. Accounts receivable are recorded net of allowance for credit losses. The following table sets forth activities in the allowance for credit losses for the periods indicated.

Inventory

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. The Company determines cost on a first-in first-out basis and include both the costs of acquisition and manufacturing in the Company’s 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 the Company’s manufacturing facility in Texas. If the manufacturing facility utilization is abnormally low, the portion of the Company’s 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.

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.

Long-Lived Assets

Property and equipment are stated at cost less accumulated depreciation. Cost includes amounts paid to acquire or construct the asset as well as any expenditure that substantially adds to the value of or significantly extends the useful life of an existing asset. Repair and maintenance costs are expensed as incurred. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets, which range from 3 to 10 years. Leasehold improvements are amortized over the shorter of the lease term or expected useful life of the improvements.

Internal-use software, whether purchased or developed, is capitalized at cost and amortized on a straight-line basis over its estimated useful life. Costs associated with internally developed software are expensed until the point at which the project has reached the development stage. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they provide additional functionality. Software maintenance and training costs are expensed in the period in which they are incurred. The capitalization of internal-use software requires judgment in determining when a project has reached the development stage and the period over which the Company expects to benefit from the use of that software. Capitalized costs are recorded as part of property and equipment in the consolidated balance sheets. Capitalized internal-use software is amortized on a straight-line basis over its estimated useful life, which is generally three years, and is recorded as cost of revenue in the consolidated statements of operations.

The Company capitalizes implementation costs related to cloud computing (i.e., hosting) arrangements that are accounted for as a service contract that meets the accounting requirement for capitalization as such implementation costs were incurred to develop or utilize internal-use software hosted by a third-party vendor. The capitalized implementation costs are recorded as part of “Other assets” on the consolidated balance sheets and is amortized over the length of the service contract.

Property and equipment, including internal-use software, and capitalized implementation costs related to cloud computing arrangements, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset group exceeds the estimated undiscounted future cash flows expected to result from the use of the asset group and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess of the asset group’s carrying value over its fair value. Fair value is generally determined using an undiscounted cash flow analysis. The Company recorded asset impairment charges of $1.6 million, $2.3 million and $5.7 million in the years ended December 31, 2025, 2024 and 2023, respectively, associated with property and equipment, net. There were no events or changes in circumstances that may indicate the carrying amount of the remaining long-lived assets is not recoverable.

Leases

The Company determines if an arrangement is or contains a lease at inception. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments over the lease term.

The Company does not have any finance leases. Operating lease assets and liabilities are recognized based on the present value of the remaining lease payments over the lease term, discounted using the Company’s incremental borrowing rate. Operating lease assets also include initial direct costs incurred and prepaid lease payments, minus any lease incentives. The Company’s lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of one year or less are considered short-term leases and are not recognized as lease assets and liabilities. The Company recognizes the cost of such short-term leases on a straight-line basis over the term of the underlying agreement. The Company combines the lease and non-lease components in determining the operating lease assets and liabilities.

An impairment loss would be recognized when the carrying amount of an asset group exceeds the estimated undiscounted future cash flows expected to result from the use of the asset group. The Company recorded right of use asset impairment charges of $1.5 million, less than $0.1 million and $1.1 million in the years ended December 31, 2025, 2024 and 2023, respectively.

Business Combinations

Assets acquired and liabilities assumed as part of a business acquisition are generally recorded at their fair value at the date of acquisition. The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired also requires the Company to make estimates, which are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset. Accounting for business acquisitions requires the Company to make judgments as to whether a purchase transaction is a multiple element contract, meaning that it includes other transaction components. This judgment and determination affect the amount of consideration paid that is allocable to assets and liabilities acquired in the business purchase transaction. Additional information existing as of the acquisition date but unknown to the Company may become known during the remainder of the measurement period, not to exceed 12 months from the acquisition date, which may result in changes to the amounts and allocations recorded.

Goodwill

Goodwill results from the purchase consideration paid in excess of the fair value of the net assets recorded in connection with business acquisitions. Goodwill is not amortized but is assessed for potential impairment at least annually during the fourth quarter of each fiscal year or between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Goodwill is tested at the reporting unit level, which the Company has determined to be the same as the entity as a whole (entity level). The Company first performs qualitative assessment to determine whether it is more likely than not that the fair value of the Company’s reporting unit is less than its carrying value. If, after assessing the qualitative factors, the Company determines that it is more likely than not that the fair value of its reporting unit is less than its carrying value, an impairment analysis will be performed.

Qualitative factors include industry and market consideration, overall financial performance, share price trends and market capitalization and Company-specific events. The Company determined, after performing a qualitative review of itsone reporting unit, that it is more likely than not that the fair value of its reporting unit exceeds its carrying value. Accordingly, there wasno indication of impairment in the years ended December 31, 2025, 2024 and 2023 and no quantitative goodwill impairment test was performed.

Intangible Assets

Intangible assets include patents and other purchased intangible assets. Intangible assets with finite lives are amortized on a straight-line basis, with estimated useful lives ranging from 5 to 9 years. Indefinite-lived intangible assets are tested for impairment annually and are also tested for impairment between annual tests if an event occurs or circumstances change that would indicate that the carrying amount may be impaired. Intangible assets with finite lives are tested for impairment whenever events or circumstances indicate that the carrying amount of an asset group may not be recoverable. An impairment loss is recognized when the carrying amount of an asset group exceeds the estimated undiscounted cash flows used in determining the fair value of the asset group. The amount of the impairment loss to be recorded is calculated by the excess of the asset group’s carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis. The Company recorded asset impairment charges ofzero, $3.5 million and $3.8 million in the years ended December 31, 2025, 2024 and 2023, respectively, associated with the developed technology and customer relationship intangible asset. There were no events or changes in circumstances that may indicate the carrying amount of remaining assets is not recoverable.

Contract Liabilities

Contract liabilities are recorded as deferred revenue on the accompanying consolidated balance sheets and include payments received in advance of performance obligations under the contract and are realized when the associated revenue is recognized under the contract.

Warranty Obligations

The Company’s warranty accrual provides for the replacement of microinverter units, AC Battery storage solutions and 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 typically 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, IQ Energy Router is 5 years, and for EV

Chargers is 1 to 5 years depending on the product. On a quarterly basis, the Company employs a consistent, systematic and rational methodology to assess the adequacy of its 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 the Company to estimate its warranty liability are: (1) the number of units expected to fail and be 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 labor costs, expected to be incurred to replace failed units over time (i.e., replacement cost).

Estimated Return Rates —The Company’s Quality and Reliability department has primary responsibility to determine the estimated return rates for each generation of product. To establish initial return rate estimates for each generation of product, the Company’s quality engineers use a combination of industry standard mean time between failure estimates for individual components contained in its product, third-party data collected on similar equipment deployed in outdoor environments similar to those in which the Company’s products are installed, and rigorous long term reliability and accelerated life cycle testing which simulates the service life of the product in a short period of time. As units are deployed into operating environments, the Company continues to monitor product performance through its cloud-based monitoring services. It typically takes three tonine months between the date of sale and date of end-user installation. Consequently, the Company’s ability to monitor actual failures of units sold similarly lags bythree tonine months. When a product fails and is returned, the Company performs diagnostic root cause failure analysis to understand and isolate the underlying mechanism(s) causing the failure. The Company then uses the results of this analysis (combined with the actual, cumulative performance data collected on those units prior to failure through the Company’s cloud-based monitoring services) to draw conclusions with respect to how or if the identified failure mechanism(s) will impact the remaining units deployed in the installed base.

As the vast majority of the Company’s microinverters have been sold to end users for residential applications, the Company believes that warranty return rates will be affected by changes over time in residential home ownership because the Company expects that subsequent homeowners are less likely to file returns than the homeowners who originally purchase the microinverters.

Estimated Replacement Costs —Three factors are considered in the Company’s analysis of estimated replacement cost: (1) the estimated cost of replacement products; (2) the estimated cost to ship replacement products to end users; and (3) the estimated labor reimbursement expected to be paid to third-party installers, or estimated labor cost expected to be incurred for field service technicians, performing replacement services for the end user. Because the Company’s warranty provides for the replacement of defective microinverters or other products over long periods of time (between 5 years to 25 years, depending on the product and the generation of that product purchased), the estimated per unit cost of current and future product generations is considered in the estimated replacement cost. Estimated costs to ship replacement units are based on observable, market-based shipping costs paid by the Company to third-party freight carriers. The Company has a separate program that allows third-party installers to claim fixed-dollar reimbursements for labor costs they incur to replace failed products for a limited time from the date of original installation. Included in the Company’s estimated replacement cost is an analysis of the number of fixed-dollar labor reimbursements expected to be claimed by third-party installers over the limited offering period.

In addition to the key estimates noted above, the Company also compares actual warranty results to expected results and evaluates any significant differences. Management may make additional adjustments to the warranty provision based on performance trends or other qualitative factors. If actual return rates or replacement costs differ from the Company’s estimates in future periods, changes to these estimates may be required, resulting in increases or decreases in the Company’s warranty obligations. Such increases or decreases could be material.

Fair Value Option for Microinverters and Other Products Sold Since January 1, 2014

The Company’s warranty obligations related to products sold since January 1, 2014 provide the Company the right, but not the requirement, to assign its warranty obligations to a third party. Under ASC 825, “Financial Instruments” (also referred to as “fair value option”), an entity may choose to elect the fair value option for such warranties at the time it first recognizes the eligible item. The Company made an irrevocable election to account for all eligible warranty obligations associated with products sold since January 1, 2014 at fair value. This election was made to reflect the underlying economics of the time value of money for an obligation that will be settled over an extended period of up to 25 years.

The Company estimates the fair value of warranty obligations by calculating the warranty obligations in the same manner as for sales prior to January 1, 2014 and applying an expected present value technique to that result. The expected present value technique, an income approach, converts future amounts into a single current discounted amount. In addition to the key estimates of return rates and replacement costs, the Company used certain inputs that are unobservable and significant to the overall fair value measurement. Such additional assumptions included compensation comprised of a profit element and risk premium required of a market participant to assume the obligation and a discount rate based on the Company’s credit-adjusted risk-free rate. Refer to Note 10. “Fair Value Measurements,” for additional information.

Warranty obligations initially recorded at fair value at the time of sale will be subsequently re-measured to fair value at each reporting date. In addition, the fair value of the liability will be accreted over the corresponding term of the warranty of up to 25 years using the effective interest method.

Commitments and Contingencies

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business. An accrual for a loss contingency is recognized when it is probable and the amount of loss can be reasonably estimated.

Common Stock Repurchase

The Company accounts for repurchase of common stock under Accounting Standards Codification Topic 505 and charges the entire cost of repurchase including excise tax accrued pursuant to the repurchase to the accumulated earnings (deficit).

Advertising Costs

Advertising costs, which are expensed and included in sales and marketing expense when incurred, were $2.7 million, $1.7 million and $3.8 million during the years ended December 31, 2025, 2024 and 2023, respectively.

Research and Development Costs

The Company expenses research and development costs as incurred. Research and development expense consists primarily of expensed equipment for product development, personnel costs, including salaries, benefits and stock-based compensation, other professional costs and allocated facilities costs.

Stock-Based Compensation

Share-based payments are required to be recognized in the Company’s consolidated statements of operations based on their fair values and the estimated number of shares expected to vest. The Company measures stock-based compensation expense for all share-based payment awards made to employees and directors, based on the estimated fair values on the date of the grant. The fair value of restricted stock units (“RSUs”) granted is determined based on the price of the Company’s common stock on the date of grant. The fair value of non-market‑based performance stock units (“PSUs”) granted is determined based on the date of grant or when achievement of performance is probable. The fair value of market‑based performance stock units granted is determined using a Monte‑Carlo model based on the date of grant or when achievement of performance is probable.

Stock-based compensation for RSUs is recognized on a straight-line basis over the requisite service period. Stock-based compensation for PSUs without market conditions is recognized when the performance condition is probable of being achieved, and then on a graded basis over the requisite service period. Stock-based compensation for PSUs with market conditions is recognized on a straight-line basis over the requisite service period. Additionally, the Company estimates its forfeiture rate annually based on historical experience and revises the estimates of forfeiture in subsequent periods if actual forfeitures differ from those estimates.

Foreign Currency Translation

The Company and most of its subsidiaries use their respective local currency as their functional currency. Accordingly, foreign currency assets and liabilities are translated using exchange rates in effect at the end of the period and income or loss are translated using average exchange rates for the period. Aggregate exchange gains and losses arising from the translation of foreign assets and liabilities are included in accumulated other comprehensive loss in stockholders' equity. Foreign subsidiaries that use the U.S. dollar as their functional currency remeasure monetary assets and liabilities using exchange rates in effect at the end of the period. In addition, transactions that are denominated in non-functional currency are remeasured using exchange rates in effect at the end of the period. Exchange gains and losses arising from the remeasurement of monetary assets and liabilities are included in other income (expense), net, in the consolidated statements of operations. Non-monetary assets and liabilities are carried at their historical values.

Comprehensive Income

Comprehensive income consists of two components, net income and other comprehensive income. Other comprehensive income refers to gains and losses that are recorded as an element of stockholders’ equity but are excluded from net income. The Company’s other comprehensive income consists of foreign currency translation adjustments and changes in net unrealized gain (loss) on marketable securities, net of tax.

Income Taxes

The Company records income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax bases of assets and liabilities for financial reporting purposes and amounts recognized for income tax purposes. In estimating future tax consequences, generally all expected future events other than enactments or changes in the tax law or rates are considered. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company assesses the realizability of the deferred tax assets to determine release of valuation allowance as necessary. In the event the Company determines that it is more likely than not that the Company would be able to realize deferred tax assets in the future in excess of its net recorded amount, an adjustment to the valuation allowance for the deferred tax asset would increase income in the period such determination was made. Likewise, should it be determined that additional amounts of the net deferred tax asset will not be realized in the future, an adjustment to increase the deferred tax asset valuation allowance will reduce income in the period such determination is made.

The Company operates in various tax jurisdictions and is subject to audit by various tax authorities. The Company follows accounting for uncertainty in income taxes which requires that the tax effects of a position be recognized only if it is “more likely than not” to be sustained based solely on its technical merits as of the reporting date. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately anticipate actual outcomes.

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold, certain disclosures of state versus federal income tax expenses and taxes paid. ASU 2023-09 was effective for fiscal years beginning after December 15, 2024 and interim periods for fiscal years beginning after December 15, 2025. The Company adopted ASU 2023-09 effective for this Annual Report on Form 10-K for the year ended December 31, 2025. Refer to Note 16.

“Income Taxes,” for additional disclosures. Since ASU 2023-09 addresses only disclosures, the adoption of ASU 2023-09 did not have a significant impact on its consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”), which introduces a practical expedient for the application of the current expected credit loss model to current accounts receivable and contract assets. The practical expedient allows entities to assume that conditions as of the balance sheet date remain unchanged over the remaining life of these assets, thereby eliminating the need to incorporate macroeconomic forecasts. ASU 2025-05 is effective beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company adopted ASU 2025-05 effective for this Annual Report on Form 10-K for the year ended December 31, 2025, which did not have a significant impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

Not Yet Effective

In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures” (“ASU 2024-03”), which requires additional disclosure of certain costs and expenses within the notes to the financial statements. ASU 2024-03 will be effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact from ASU 2024-03 on its consolidated financial statements disclosures.

In September 2025, the FASB issued ASU 2025-06, “Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”), which simplifies the capitalization guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted. ASU 2025-06 permits an entity to apply the new guidance using a prospective, retrospective or modified transition approach. The Company is currently evaluating the impact from ASU 2025-06 on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-10, “Accounting for Government Grants Received by Business Entities” (“ASU 2025-10”), which establishes the accounting and presentation for government grants received by a business entity. ASU 2025-10 is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted. ASU 2025-10 permits an entity to apply the new guidance using a modified prospective basis, a modified retrospective basis, or a full retrospective basis. The Company is currently evaluating the impact from ASU 2025-10 on its consolidated financial statements.

3. REVENUE RECOGNITION

Disaggregated Revenue

The Company hasone major business activity, which is the design, manufacture and sale of solutions for the solar photovoltaic (“PV”) industry. Disaggregated revenue by primary geographical market and timing of revenue recognition for the Company’s single product line were as follows:

(1) The Company’s net revenues generated from France have represented less than 10%,10.6% and less than 10% of its net revenues for the years ended December 31, 2025, 2024 and 2023, respectively. The Company’s net revenues generated from the Netherlands have represented less than 10%, less than 10% and 15.3% of its net revenues for the years ended December 31, 2025, 2024 and 2023, respectively.

Contract Balances

Accounts receivable, and contract assets and contract liabilities from contracts with customers, were as follows:

The Company receives payments from customers based upon contractual payment terms. Accounts receivable are recorded in an amount that reflects the consideration that is expected to be received in exchange for those goods or services when the right to consideration becomes unconditional.

Contract assets include deferred product costs and commissions associated with the deferred revenue and will be amortized along with the associated revenue. The Company hadno asset impairment charges related to contract assets for the year ended December 31, 2025.

Significant changes in the balances of contract assets (prepaid expenses and other assets) in the year ended December 31, 2025 were as follows (in thousands):

Contract liabilities are recorded as deferred revenue on the accompanying consolidated balance sheets and include payments received in advance of performance obligations under the contract and are realized when the associated revenue is recognized under the contract.

For the year ended December 31, 2025 and 2024, contract liabilities included $62.9 million and $110.3 million, respectively, of cash prepayments from its customers for products to be delivered in 2026 and 2025, respectively, which represents the amount equal to the aggregate purchase price of the executed sales agreements.

Significant changes in contract liabilities (deferred revenue) in the year ended December 31, 2025 were as follows (in thousands):

Remaining Performance Obligations

Estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period were as follows:

4. INVENTORY

Inventory consists of the following:

(1) In November 2025, the Company commenced in-house manufacturing at the Texas facility previously operated by Salcomp Manufacturing USA Corp, resulting in higher raw materials and new work-in-process inventory.

5. PROPERTY AND EQUIPMENT, NET

Property and equipment, net, consist of the following:

Depreciation expense for property and equipment, net, for the years ended December 31, 2025, 2024 and 2023 was $52.8 million, $51.5 million and $40.7 million, respectively.

As of December 31, 2025 and 2024, unamortized capitalized software costs were $17.5 million and $22.6 million, respectively.

During the years ended December 31, 2025, 2024 and 2023, the Company determined that a triggering event had occurred as a result of changes to the Company’s long-term projections, accordingly, the Company recorded an impairment charge for the property and equipment, net asset of $1.6 million, $2.3 million and $5.7 million, respectively, within “Restructuring and asset impairment charges” on the consolidated statements of operations.

6. GOODWILL AND INTANGIBLE ASSETS

The Company’s goodwill as of December 31, 2025 and December 31, 2024 was as follows:

The Company’s purchased intangible assets as of December 31, 2025 and December 31, 2024 were as follows:

During the year ended December 31, 2025, intangible assets decreased by less than $0.1 million due to the impact of foreign currency translation.

Amortization expense related to finite-lived intangible assets were as follows:

Amortization of developed technology is recorded to cost of revenues, amortization of customer relationships and trade-names are recorded to sales and marketing expense, and amortization of certain customer relationships is recorded as a reduction to revenue.

The expected future amortization expense of intangible assets as of December 31, 2025 is presented below:

7. CASH EQUIVALENTS, RESTRICTED CASH AND MARKETABLE SECURITIES

Cash equivalents, restricted cash and marketable securities consist of the following:

The following table summarizes the contractual maturities of the Company’s cash equivalents and marketable securities as of December 31, 2025:

All available-for-sale securities have been classified as current, based on management's intent and ability to use the funds in current operations.

8. OTHER FINANCIAL INFORMATION

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

Accrued Liabilities

Accrued liabilities consist of the following:

9. WARRANTY OBLIGATIONS

The Company’s warranty obligation activities were as follows:

(1) Refer to Note 10, “Fair Value Measurements” for additional information about the monetary impact for changes in the discount rate.

Changes in Estimates

On a quarterly basis, the Company uses the best and most complete underlying information available, following a consistent, systematic and rational methodology to determine its warranty obligations. The Company considers all available evidence to assess the reasonableness of all key assumptions underlying its estimated warranty obligations for each generation of microinverter, battery and related accessories. The changes in estimates discussed below resulted from consideration of new or additional information becoming available and subsequent developments. Changes in estimates included in the table above were comprised of the following:

In the year ended December 31, 2025, the Company recorded $12.5 million in warranty expense from changes in estimates, of which $13.7 million related to an increase in product replacement costs primarily for estimated additional tariff costs and $6.1 million related to continuing analysis of field performance data and diagnostic root-cause failure analysis primarily for prior generation products, partially offset by $7.3 million related to continuing analysis of field performance data and diagnostic root-cause failure analysis for Enphase IQ Battery storage systems.

In the year ended December 31, 2024, the Company recorded $1.1 million in warranty expense from changes in estimates, of which $10.2 million related to the Company proactively addressing certain component defects in a specific population of products that did not meet the Company’s high quality standards, $6.0 million for continuing analysis of field performance data and diagnostic root-cause failure analysis primarily related to prior generation products, $5.8 million from increase in product replacement costs due to increase in freight costs as well as $0.5 million related to increasing the warranty term to 20 years for microinverter units sold in Mexico, Colombia, Panama, Costa Rica andnine Caribbean countries. This expense was partially offset by a benefit from $17.0 million related to a decrease in product replacement costs primarily associated with Enphase IQ Battery storage systems and related accessories as the Company expanded its network of field service technicians in the United States, Europe and Australia to provide direct homeowner assistance, and $4.4 million related to continuing analysis of field performance data and diagnostic root-cause failure analysis for early generations of the Enphase IQ Battery storage system.

In the year ended December 31, 2023, the Company recorded $19.2 million in warranty benefit from changes in estimates, of which $27.3 million related to a decrease in product replacement costs related to Enphase IQ Battery storage systems and accessories as the Company expanded its network of field service technicians in the United States, Europe and Australia to provide direct homeowner assistance, and $8.8 million related to a decrease in product replacement costs for all other products. This benefit was partially offset by $8.6 million related to the Company proactively addressing certain component defects in a specific population of products that did not meet the Company's high quality standards as well as continuing analysis of field performance data and diagnostic root-cause failure analysis primarily for prior generation products and $8.3 million for increasing the warranty period for the IQ Battery from 10 years to 15 years.

10. FAIR VALUE MEASUREMENTS

The accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

•Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of such assets or liabilities do not entail a significant degree of judgment.

•Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

•Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The following table presents assets and liabilities measured at fair value on a recurring basis using the above input categories:

Notes due 2028 and Notes due 2026

The Company carries the Notes due 2028 (as defined in Note 12, “Debt”) and Notes due 2026 (as defined in Note 12, “Debt”) at face value less unamortized debt issuance costs on its consolidated balance sheets. As of December 31, 2025, the fair value of the Notes due 2028 and Notes due 2026 was $500.5 million and $619.4 million, respectively. The fair value as of December 31, 2025 was determined based on the closing trading price per $100 principal amount as of the last day of trading for the period. The Company considers the fair value of the Notes due 2028 and Notes due 2026 to be a Level 2 measurement as they are not actively traded.

Equity investments without readily determinable fair value

The Company had previously invested $6.0 million in a privately-held company without a readily determinable fair value. During the year ended December 31, 2024, the Company determined that the carrying value of the investment was not recoverable. Accordingly, the Company recorded an impairment charge of $6.0 million within “Other income, net” on the consolidated statements of operations for the year ended December 31, 2024.

In October 2025, the Company invested $5.0 million to acquire 19.99% of the outstanding membership interests of a privately-held company without a readily determinable fair value. The Company elected the fair value option for this investment. Accordingly, this investment is measured at fair value on a recurring basis, with changes in fair value recognized in “Other expense, net” in the Company’s consolidated statements of operations. Further, the Company has concluded that this investment is considered to be a Level 3 measurement due to the use of significant unobservable inputs in the valuation model. The fair value of this investment approximated the purchase price as of December 31, 2025. This investment is included in “Other assets” on the consolidated balance sheet.

Investments in debt securities

In January 2021, the Company invested approximately $25.0 million in a privately-held company. The Company concluded the investment qualifies as an investment in a debt security, as it accrues interest and principal plus accrued interest becomes payable back to the Company at certain dates unless it is converted to equity at a pre-determined price. As the investment includes a conversion option, the Company has elected to account for this investment under the fair value option and any change in fair value of the investment is recognized in “Other income (expense), net” in the Company’s consolidated statements of operations for that period. Further, the Company has concluded that the Company’s investment in a debt security is considered to be a Level 3 measurement due to the use of significant unobservable inputs in the valuation model. The fair value of $29.6 million and $34.4 million as of December 31, 2025 and 2024, respectively, was determined using discounted cash flow methodology and assumptions include implied yield and change in estimated term of investment being held-to-maturity.

In September 2021, the Company invested approximately $13.0 million in secured convertible promissory notes issued by the stockholders of a privately-held company. The investment qualifies as an investment in a debt security and will accrete interest and principal plus accrued interest that becomes payable at certain dates unless it is converted to equity at a pre-determined price. As the investment includes a conversion option, the Company has elected to account for this investment under the fair value option and any change in fair value of the investment is recognized in “Other income (expense), net” in the Company’s consolidated statements of operations for that period. Further, the Company has concluded that the Company’s investment in a debt security is considered to be a Level 3 measurement due to the use of significant unobservable inputs in the valuation model. The fair value of $11.0 million and $13.9 million as of December 31, 2025 and 2024, respectively, was determined using discounted cash flow methodology and assumptions include implied yield and change in estimated term of investment being held-to-maturity.

In December 2022, the Company took a non-voting participating interest of approximately $15.0 million in a loan held by a privately-held company. As of December 31, 2024, the Company accreted interest of approximately $2.0 million in “Other income (expense), net” in the consolidated statements of operations. The Company determined that the carrying value of the investment was not recoverable as the privately-held company filed for Chapter 11 bankruptcy during the year ended December 31, 2024. Accordingly, the Company recorded an impairment charge of $17.0 million within “Other income, net” on the consolidated statements of operations for the year ended December 31, 2024.

In July 2023, the Company invested approximately $15.0 million in a secured convertible promissory note issued by the stockholders of a privately-held company. The investment qualified as an investment in a debt security and will accrete interest. The principal plus accrued interest is payable upon maturity unless it is converted to equity at a pre-determined price. As the investment includes a conversion option, the Company has elected to account for this investment under the fair value option and any changes in fair value of the investment is recognized in “Other income (expense), net” in the Company’s consolidated statements of operations for that period. Further, the Company has concluded that the Company’s investment in a debt security is considered to be a Level 3 measurement due to the use of significant unobservable inputs in the valuation model. The fair value of $14.5 million and $16.6 million as of December 31, 2025 and 2024, respectively, was determined using discounted cash flow methodology and assumptions include implied yield and change in estimated term of investment being held-to-maturity.

In September 2025, the Company invested $6.3 million in cash to purchase convertible notes with an aggregate principal amount of $7.0 million issued by SunPower Inc. (“SunPower”) (formerly named “Complete Solaria, Inc.”). The Company elected the fair value option for this investment. Accordingly, the convertible notes are measured at fair value on a recurring basis, with changes in fair value recognized in “Other expense, net” in the Company’s consolidated statements of operations. The fair value of the notes approximated the purchase price. Subsequent changes in fair value, including those attributable to changes in credit risk and the embedded conversion feature, will be reflected in the Company’s consolidated statements of operations. Interest income is accrued and recognized based on the stated coupon rate.

Investments in debt securities is recorded in “Other assets” on the accompanying consolidated balance sheets as of December 31, 2025 and December 31, 2024. The changes in the balance in investments in debt securities during the period were as follows:

Investment in tax equity fund

In the year ended December 31, 2025, the Company made an investment in a tax equity fund contributing $9.8 million. The Company has elected to report its investment at fair value, which is equal to the present value of the remaining future cash flows expected to be received from the investment. The investment is included in “Other assets” on the accompanying consolidated balance sheet as of December 31, 2025.

As of December 31, 2025, the fair value of the Company’s investment in tax equity fund was $0.8 million, representing its proportionate share of the tax equity fund’s net assets. As of December 31, 2025, the Company recognized a deferred tax asset of $8.8 million related to the difference between the initial investment amounts and its fair value. Additionally, the Company recognized an expense of $0.2 million for year ended December 31, 2025 included in “Other income (expense), net” in the consolidated statements of operations.

Issuance of Loan Receivables

The loan receivables represent financing arrangements provided to certain direct and indirect customers. These loan receivables have contractual maturities ranging fromone tothree years and are recorded on amortized cost basis. Interest income is accrued and recognized based on the stated coupon rate, included in “Other income (expense), net” in the consolidated statements of operations. The principal outstanding under the Company’s loan receivables were as follows:

There wasno activity in allowance for credit losses during the year ended December 31, 2025.

Warranty obligations

Fair Value Option for Warranty Obligations Related to Products Sold Since January 1, 2014

The Company estimates the fair value of warranty obligations by calculating the warranty obligations in the same manner as for sales prior to January 1, 2014 and applying an expected present value technique to that result. The expected present value technique, an income approach, converts future amounts into a single current discounted amount. In addition to the key estimates of return rates and replacement costs, the Company used certain Level 3 inputs, which are unobservable and significant to the overall fair value measurement. Such additional assumptions are based on the Company’s credit-adjusted risk-free rate (“discount rate”) and compensation comprised of a profit element and risk premium required of a market participant to assume the obligation.

The following table provides information regarding changes in nonfinancial liabilities related to the Company’s warranty obligations measured at fair value on a recurring basis using significant unobservable inputs designated as Level 3 for the periods indicated:

Quantitative and Qualitative Information about Level 3 Fair Value Measurements

As of December 31, 2025 and December 31, 2024, the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 were as follows:

Sensitivity of Level 3 Inputs - Warranty Obligations

Each of the significant unobservable inputs is independent of the other. The profit element and risk premium are estimated based on the requirements of a third-party participant willing to assume the Company’s warranty obligations. The discount rate is determined by reference to the Company’s own credit standing at the fair value measurement date, which increased 0.1% in the year ended December 31, 2025 due to the increase in the risk free rate and market spreads, contributing to the $0.2 million change in warranty benefit captured in “Change in discount rate” in the table above. Under the expected present value technique, increasing the profit element and risk premium input by 100 basis points would result in a $1.4 million increase to the liability. Decreasing the profit element and risk premium by 100 basis points would result in a $1.4 million reduction to the liability. Increasing the discount rate by 100 basis points would result in a $13.3 million decrease to the liability. Decreasing the discount rate by 100 basis points would result in a $14.9 million increase to the liability.

11. RESTRUCTURING AND ASSET IMPAIRMENT CHARGES

Restructuring and asset impairment charges consist of the following:

2023 Restructuring Plan

In the fourth quarter of 2023, the Company implemented a restructuring plan (the “2023 Restructuring Plan”) designed to increase operational efficiencies and execution, reduce operating costs, and better align the Company’s workforce and cost structure with current market conditions, and the Company’s business needs, strategic priorities and ongoing commitment to profitable growth. The Company completed its restructuring activities under the 2023 Restructuring Plan in the fourth quarter of 2024 and substantially all of the remaining liabilities as of December 31, 2024, were settled by year ended December 31, 2025.

The following table presents the details of the Company’s restructuring and asset impairment charges under the 2023 Restructuring Plan for the years ended years ended December 31, 2025, 2024 and 2023:

The following table provides information regarding changes in the Company’s accrued restructuring balances under the 2023 Restructuring Plan for the periods indicated:

2024 Restructuring Plan

In the fourth quarter of 2024, the Company implemented a restructuring plan (the “2024 Restructuring Plan”) designed to better align its workforce and cost structure with the Company’s business needs, strategic priorities and ongoing commitment to profitable growth, while increasing operational efficiencies and reducing operating cost. The Company completed its restructuring activities under the 2024 Restructuring Plan in the fourth quarter of 2025.

The following table presents the details of the Company’s restructuring and asset impairment charges under the 2024 Restructuring Plan for the years ended December 31, 2025 and 2024:

The following table provides information regarding changes in the Company’s accrued restructuring balances under the 2024 Restructuring Plan for the periods indicated:

12. DEBT

The following table provides information regarding the Company’s debt:

The following tables present the total amount of interest cost recognized in the consolidated statements of operations relating to the Notes:

Convertible Senior Notes due 2028

On March 1, 2021, the Company issued $575.0 million aggregate principal amount of its 0.0% convertible senior notes due 2028 (the “Notes due 2028”). The Notes due 2028 will not bear regular interest, and the principal amount of the Notes due 2028 will not accrete. The Notes due 2028 are general unsecured obligations and are governed by an indenture between the Company and U.S. Bank National Association, as trustee. The Notes due 2028 will mature on March 1, 2028, unless earlier repurchased by the Company or converted at the option of the holders. The Company received approximately $566.4 million in net proceeds, after deducting the initial purchasers’ discount, from the issuance of the Notes due 2028.

The initial conversion rate for the Notes due 2028 is 3.5104 shares of common stock per $1,000 principal amount of the Notes due 2028 (which represents an initial conversion price of approximately $284.87 per share). Upon conversion, the Company will settle conversions of the Notes due 2028 through payment or delivery, as the case may be, of cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.

The Company may redeem for cash all or any portion of the Notes due 2028, at the Company’s election, on or after September 6, 2024, if the last reported sale price of the Company’s common stock has been greater than or equal to 130% of the conversion price then in effect for the Notes due 2028 (i.e., $370.33, which is 130% of the current conversion price for the Notes due 2028) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The redemption price will equal 100% of the principal amount of the Notes due 2028 to be redeemed, plus accrued and unpaid special interest, if any to, but excluding, the relevant redemption date. No sinking fund is provided for the Notes due 2028.

The Notes due 2028 may be converted on any day prior to the close of business on the business day immediately preceding September 1, 2027, in multiples of $1,000 principal amount, at the option of the holder only under any of the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the Notes due 2028 on each applicable trading day; (2) during thefive business day period after anyfive consecutive trading day period (the “Measurement Period”) in which the “trading price” (as defined in the relevant indenture) per $1,000 principal amount of notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the Notes due 2028 on each such trading day; (3) if the Company calls any or all of the Notes due 2028 for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after September 1, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date of March 1, 2028, holders of the Notes due 2028 may convert their notes at any time, regardless of the foregoing circumstances. Upon the occurrence of a fundamental change (as defined in the relevant indenture), holders may require the Company to repurchase all or a portion of their Notes due 2028 for cash at a price equal to 100% of the principal amount of the notes to be repurchased plus any accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.

As of December 31, 2025, the sales price of the Company’s common stock was not greater than or equal to $370.33 (130% of the notes conversion price) for at least 20 trading days (whether consecutive or not) during a period of 30 consecutive trading days preceding the quarter-ended December 31, 2025. As a result, the Notes due 2028 are not convertible at the holders’ option. Accordingly, the Company classified the net carrying amount of the Notes due 2028 of $572.2 million as Debt, non-current on the consolidated balance sheet as of December 31, 2025. As of December 31, 2025, the unamortized deferred issuance cost for the Notes due 2028 was $2.8 million on the consolidated balance sheet.

Notes due 2028 Hedge and Warrant Transactions

In connection with the offering of the Notes due 2028, the Company entered into privately-negotiated convertible note hedge transactions (“Notes due 2028 Hedge”) pursuant to which the Company has the option to purchase a total of approximately 2.0 million shares of its common stock (subject to anti-dilution adjustments), which is the same number of shares initially issuable upon conversion of the Notes due 2028, at a price of $284.87 per share. The total cost of the convertible note hedge transactions was approximately $161.6 million. The convertible note hedge transactions are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of the Notes due 2028 and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be.

Additionally, the Company separately entered into privately-negotiated warrant transactions (the “2028 Warrants”) whereby the Company sold warrants to acquire approximately 2.0 million shares of the Company’s common stock (subject to anti-dilution adjustments) at an initial strike price of $397.91 per share. The Company received aggregate proceeds of approximately $123.4 million from the sale of the 2028 Warrants. If the market value per share of the Company’s common stock, as measured under the 2028 Warrants, exceeds the strike price of the 2028 Warrants, the 2028 Warrants will have a dilutive effect on the Company’s earnings per share, unless the Company elects, subject to certain conditions, to settle the 2028 Warrants in cash. Taken together, the purchase of the Notes due 2028 Hedge and the sale of the 2028 Warrants are intended to reduce potential dilution from the conversion of the Notes due 2028 and to effectively increase the overall conversion price from $284.87 to $397.91 per share. The 2028 Warrants are only exercisable on the applicable expiration dates in accordance with the Notes due 2028 Hedge. Subject to the other terms of the 2028 Warrants, the first expiration date applicable to the Notes due 2028 Hedge is June 1, 2028, and the final expiration date applicable to the Notes due 2028 Hedge is July 27, 2028.

Given that the transactions meet certain accounting criteria, the Notes due 2028 Hedge and the 2028 Warrants transactions were recorded in stockholders’ equity, and they were not accounted for as derivatives and are not remeasured each reporting period.

Convertible Senior Notes due 2026

On March 1, 2021, the Company issued $575.0 million aggregate principal amount of 0.0% convertible senior notes due 2026 (the “Notes due 2026”). In addition, on March 12, 2021, the Company issued an additional $57.5 million aggregate principal amount of the Notes due 2026 pursuant to the initial purchasers’ full exercise of the over-allotment option for additional Notes due 2026. The Notes due 2026 will not bear regular interest, and the principal amount of the Notes due 2026 will not accrete. The Notes due 2026 are general unsecured obligations and are governed by an indenture between the Company and U.S. Bank National Association, as trustee. The Notes due 2026 will mature on March 1, 2026, unless repurchased earlier by the Company or converted at the option of the holders. The Company received approximately $623.0 million in net proceeds, after deducting the initial purchasers’ discount, from the issuance of the Notes due 2026.

The initial conversion rate for the Notes due 2026 is 3.2523 shares of common stock per $1,000 principal amount of the Notes due 2026 (which represents an initial conversion price of approximately $307.47 per share). Upon conversion, the Company will settle conversions of Notes due 2026 through payment or delivery, as the case may be, of cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.

The Company may redeem for cash all or any portion of the Notes due 2026, at the Company’s election, on or after September 6, 2023, if the last reported sale price of the Company’s common stock has been greater than or equal to 130% of the conversion price then in effect for the Notes due 2026 (i.e., $399.71, which is 130% of the current conversion price for the Notes due 2026) for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The redemption price will equal 100% of the principal amount of the Notes due 2026 to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the relevant redemption date for the Notes due 2026. The redemption price will be increased as described in the relevant indentures by a number of additional shares of the Company in connection with such optional redemption by the Company. No sinking fund is provided for the Notes due 2026.

The Notes due 2026 may be converted on any day prior to the close of business on the business day immediately preceding September 1, 2025, in multiples of $1,000 principal amount, at the option of the holder only under any of the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price of the Notes due 2026 on each applicable trading day; (2) during thefive business day period after anyfive consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the relevant indenture) per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for Notes due 2026 on each such trading day; (3) if the Company calls any or all of the Notes due 2026 for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after September 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date of March 1, 2026, holders of the Notes due 2026 may convert their notes at any time, regardless of the foregoing circumstances. Upon the occurrence of a fundamental change (as defined in the relevant indenture), holders may require the Company to repurchase all or a portion of their Notes due 2026 for cash at a price equal to 100% of the principal amount of the notes to be repurchased plus any accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.

The Notes due 2026 are convertible at the option of the holder any time from September 1, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date of March 1, 2026. Further, as the Notes due 2026 mature in less than a year, accordingly, the Company has classified the net carrying amount of the Notes due 2026 of $632.2 million as Debt, current on the consolidated balance sheet as of December 31, 2025. As of December 31, 2025, the unamortized deferred issuance cost for the Notes due 2026 was $0.3 million on the consolidated balance sheet.

Notes due 2026 Hedge and Warrant Transactions

In connection with the offering of the Notes due 2026 (including in connection with the issuance of additional Notes due 2026 upon the initial purchasers’ exercise of their over-allotment option), the Company entered into privately-negotiated convertible note hedge transactions (the “Notes due 2026 Hedge”) pursuant to which the Company has the option to purchase a total of approximately 2.1 million shares of its common stock (subject to anti-dilution adjustments), which is the same number of shares initially issuable upon conversion of the Notes due 2026, at a price of $307.47 per share, which is the initial conversion price of the Notes due 2026. The total cost of the Notes due 2026 Hedge was approximately $124.6 million. The Notes due 2026 Hedge are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of the Notes due 2026 and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be.

Additionally, the Company separately entered into privately-negotiated warrant transactions, including in connection with the issuance of additional Notes due 2026 upon the initial purchasers’ exercise of their over-allotment option (the “2026 Warrants”), whereby the Company sold warrants to acquire approximately 2.1 million shares of the Company’s common stock (subject to anti-dilution adjustments) at an initial strike price of $397.91 per share. The Company received aggregate proceeds of approximately $97.4 million from the sale of the 2026 Warrants. If the market value per share of the Company’s common stock, as measured under the 2026 Warrants, exceeds the strike price of the 2026 Warrants, the 2026 Warrants will have a dilutive effect on the Company’s earnings per share, unless the Company elects, subject to certain conditions, to settle the 2026 Warrants in cash. Taken together, the purchase of the Notes due 2026 Hedge and the sale of the 2026 Warrants are intended to reduce potential dilution from the conversion of the Notes due 2026 and to effectively increase the overall conversion price from $307.47 to $397.91 per share. The 2026 Warrants are only exercisable on the applicable expiration dates in accordance with the 2026 Warrants. Subject to the other terms of the 2026 Warrants, the first expiration date applicable to the Warrants is June 1, 2026, and the final expiration date applicable to the 2026 Warrants is July 27, 2026.

Given that the transactions meet certain accounting criteria, the Notes due 2026 Hedge and the 2026 Warrants transactions were recorded in stockholders’ equity, and they were not accounted for as derivatives and are not remeasured each reporting period.

Convertible Senior Notes due 2025

The Company settled all of its outstanding 0.25% convertible senior notes due 2025 (the “Notes due 2025”) on March 1, 2025. As part of the settlement, the Company paid $102.2 million in cash towards principal amount of the Notes due 2025 and no shares were issued in connection with the settlement as the conversion value was less than the principal amount of the Notes due 2025. Following the settlement, there wereno Notes due 2025 outstanding as of December 31, 2025.

Notes due 2025 Hedge and Warrant Transactions

In connection with the offering of the Notes due 2025, the Company entered into privately-negotiated convertible note hedge transactions (the “Notes due 2025 Hedge”) to reduce potential dilution to the Company’s common stock upon any conversion of the Notes due 2025 and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be. The Notes due 2025 Hedge expired on March 1, 2025, upon maturity of Notes due 2025 as the strike price was higher than the market price.

Additionally, the Company separately entered into privately-negotiated warrant transactions in connection with the offering of the Notes due 2025 whereby the Company sold the 2025 Warrants to acquire approximately 3.9 million shares of the Company’s common stock (subject to anti-dilution adjustments) at an initial strike price of $106.94 per share. None of the 2025 Warrants were exercised and all expired during the year ended December 31, 2025.

13. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases office facilities under noncancellable operating leases that expire on various dates through 2034, some of which may include options to extend the leases for up to 12 years.

The components of lease expense are presented as follows:

The components of right of use assets and lease liabilities are presented as follows:

Supplemental cash flow and other information related to operating leases were as follows:

Undiscounted cash flows of operating lease liabilities as of December 31, 2025 were as follows:

Purchase Obligations

The Company has contractual obligations related to component inventory that it, and its contract manufacturers procure on its behalf in accordance with its production forecast as well as other inventory related purchase commitments. As of December 31, 2025, these purchase obligations totaled approximately $252.3 million.

Litigation

The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully resolved. An accrual for a loss contingency is recognized when it is probable and the amount of loss or recovery can be reasonably estimated. The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, the Company’s business, results of operations, financial position and cash flows for that reporting period could be materially adversely affected. As of December 31, 2025, in the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss greater than a recorded accrual, concerning loss contingencies for asserted legal and other claims.

14. STOCKHOLDERS' EQUITY

In July 2023, the board of directors authorized a share repurchase program (the “2023 Repurchase Program”) pursuant to which the Company was authorized to repurchase up to $1.0 billion of the Company’s common stock. The Company may repurchase shares of common stock from time to time through solicited or unsolicited transactions in the open market, in privately negotiated transactions or pursuant to a Rule 10b5-1 plan.

During the year ended December 31, 2025, 2024 and 2023, the Company repurchased and subsequently retired 2,297,053,4,543,016 and 2,029,894 shares, respectively, of common stock from the open market at an average cost of $56.58, $86.15 and $103.45 per share, respectively, for a total of $130.0 million, $391.4 million and $210.0 million, respectively.

As of December 31, 2025, $268.7 million remains available for repurchase of shares under the 2023 Repurchase Program.

15. STOCK-BASED COMPENSATION

2011 Plan

Under the 2011 Equity Incentive Plan (the “2011 Plan”), the Company could initially issue up to 2,643,171 shares of its common stock pursuant to stock options, stock appreciation rights (“SARS”), restricted stock awards (“RSA”), RSUs, PSUs, and other forms of equity compensation, or collectively, stock awards, all of which may be granted to employees, including officers, and to non-employee directors and consultants. Options granted under the 2011 Plan before August 1, 2012 generally expire 10 years after the grant date and options granted thereafter generally expire seven years after the grant date. Equity awards granted under the 2011 Plan generally vested over afour-year period from the date of grant based on continued service to the Company. As of May 19, 2021, no further stock options or other stock awards may be granted under the 2011 Plan.

2021 Plan

On May 19, 2021, at the 2021 annual meeting of stockholders of the Company, the stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”), as the successor to the 2011 Plan. The 2021 Plan was amended and restated at the 2025 annual meeting of stockholders of the Company to increase the number of shares of common stock authorized for issuance thereunder by an additional 4,000,000 shares. The 2021 Plan provides for the grant of incentive stock options, SARS, RSAs, RSUs, PSUs and other forms of equity compensation. Eligible participants under the 2021 Plan include Company’s employees, directors and consultants. The 2021 Plan provides, among other things, that the number of shares of the Company’s common stock, $0.00001 par value per share, reserved for issuance under the 2021 Plan (subject to adjustment for certain changes in the Company’s capitalization) is equal to: (A) the sum of (i)13,100,456 newly reserved shares of the Company’s common stock and (ii)5,256,517 Returning Shares (as defined below) as such shares become available from time to time as set forth in the 2021 Plan. “Returning Shares” means shares subject to any outstanding award granted under the 2011 Plan (“Prior Plan Award”) that are (i) not issued because such Prior Plan Award or any portion thereof expires or otherwise terminates without all of the shares covered by such Prior Plan Award having been issued, or is settled in cash; (ii) forfeited back to or repurchased by the Company because of a failure to vest; or (iii) reacquired or withheld (or not issued) by the Company to satisfy the purchase price of, or a tax withholding obligation in connection with, a Prior Plan Award that is a Full Value Award (as defined in the 2021 Plan). As of December 31, 2025,5,978,943 shares remained available for issuance under the 2021 Plan.

2011 Employee Stock Purchase Plan

The 2011 Employee Stock Purchase Plan (“ESPP”) became effective immediately upon the execution and delivery of the underwriting agreement for the Company’s initial public offering on March 29, 2012. The ESPP authorized the issuance of 669,603 shares of the Company’s common stock pursuant to purchase rights granted to employees. The number of shares of common stock reserved for issuance will automatically increase, on each January 1, by a lesser of (i)700,000 shares of the Company’s common stock or (ii)1.0% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, as determined by the Company’s board of directors. In 2022, the Company’s board of directors waived the automatic increase of 700,000 shares that were to be added on January 1, 2023 for issuance under the ESPP andno additional shares were added to the plan on January 1, 2023. As of December 31, 2025,2,797,029 shares remained available for future issuance under the ESPP. On January 1, 2026, the shares available for issuance under the ESPP automatically increased by 700,000 shares.

The ESPP is implemented by concurrent offering periods and each offering period may contain up tofour interim purchase periods. In general, offering periods consist of the 24-month periods commencing on each May 15 and November 15 of a calendar year.

Generally, all full-time employees in the United States and certain other countries in which the Company operates, including executive officers, are eligible to participate in the ESPP. The ESPP permits eligible employees to purchase the Company’s common stock through payroll deductions, which may not exceed 15% of the employee’s total compensation subject to certain limits. Stock may be purchased under the plan at a price equal to 85% of the fair market value of the Company’s common stock on either the date of purchase or the first day of an offering period, whichever is lower. Atwo‑year look-back feature in the ESPP causes an offering period to reset if the fair value of the Company’s common stock on a purchase date is less than that on the initial offering date for that offering period. The reset feature, when triggered, will be accounted for as a modification to the original offering, resulting in additional expense to be recognized over the 24-month period of the new offering. During any calendar year, participants may not purchase shares of the Company’s common stock having a value greater than $25,000, based on the fair market value per share of the Company’s common stock at the beginning of an offering period.

Valuation of Equity Awards

Stock Options

No stock options were granted during the years ended December 31, 2025, 2024 and 2023.

Restricted Stock Units

The fair value of the Company’s RSU awards granted is based upon the closing price of the Company’s stock price on the date of grant.

Performance Stock Units

The fair value of the Company’s non-market PSU awards granted was based upon the closing price of the Company’s stock price on the date of grant. The fair value of awards of the Company’s PSU awards containing market conditions was determined using a Monte Carlo simulation model based upon the terms of the conditions, the expected volatility of the underlying security, and other relevant factors.

Stock-based Compensation Expense

Stock-based compensation expense for all stock-based awards, which includes shares purchased under the Company’s ESPP, RSUs and PSUs, expected to vest is measured at fair value on the date of grant and recognized ratably over the requisite service period.

The following table summarizes the components of total stock-based compensation expense included in the consolidated statements of operations for the periods presented:

The following table summarizes the various types of stock-based compensation expense for the periods presented:

As of December 31, 2025, there was approximately $277.1 million of total unrecognized stock-based compensation expense related to unvested equity awards, which are expected to be recognized over a weighted-average period of 2.4 years.

Equity Awards Activity

Stock Options

No stock options were granted during the year ended December 31, 2025, 2024 and 2023. Stock option activity during the period, as well as stock options outstanding as of December 31, 2025, were immaterial.

Restricted Stock Units

The following table summarizes RSU activity:

(1) The intrinsic value of RSUs vested is based upon the value of the Company’s stock when vested. The intrinsic value of RSUs outstanding and expected to vest as of December 31, 2025 is based on the closing price of the last trading day during the period ended December 31, 2025. The Company’s stock fair value used in this computation was $32.05 per share.

Performance Stock Units

The following summarizes PSU activity:

(1) The intrinsic value of PSUs vested is based upon the value of the Company’s stock when vested. The intrinsic value of PSUs outstanding and expected to vest as of December 31, 2025 is based on the closing price of the last trading day during the period ended December 31, 2025. The Company’s stock fair value used in this computation was $32.05 per share.

Employee Stock Purchase Plan

A summary of ESPP activity for the years presented is as follows (in thousands, except per share data):

16. INCOME TAXES

The domestic and foreign components of income before income taxes consisted of the following:

The income tax provision for the years presented was as follows:

The Company adopted ASU 2023‑09 prospectively for the year ended December 31, 2025, and a reconciliation of the income tax provision and the amount computed by applying the statutory federal income tax rate of 21% to income before income taxes was as follows:

(1) During the year ended December 31, 2025, state taxes in California comprised greater than 90% of the tax effect in this category.

A reconciliation of the income tax provision, prior to the adoption of ASU 2023-09, to the amount computed by applying the statutory federal income tax rate of 21% to income before income taxes for the years presented was as follows:

A summary of significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 was as follows:

As of December 31, 2025 and 2024, the Company recorded a valuation allowance of $1.8 million and $2.0 million, respectively, against certain of its net operating losses on one of its foreign operations, as it is more likely than not that such amounts will not be fully realized.

The Company's accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of the Company's deferred tax assets. Assessing the realizability of deferred tax assets is dependent upon several factors, including the likelihood and amount, if any, of future taxable income in relevant jurisdictions during the periods in which those temporary differences become deductible. The Company's management forecasts taxable income by considering all available positive and negative evidence including its history of operating income or losses and its financial plans and estimates which are used to manage the business. These assumptions require significant judgment about future taxable income. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are reduced

The Company has approximately $8.8 million of federal tax credit and $8.3 million of state tax credit carryforwards. The federal credits begin to expire in 2031 and the state credits can be carried forward indefinitely. As of December 31, 2025, the Company has foreign net operating losses of $5.5 million from the acquisition of GreenCom, which can be carried over indefinitely.

Utilization of some of the federal credit carryforwards and state net operating loss and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions. The Company believes that no such change has occurred through December 31, 2025.

Accounting for uncertain tax positions prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company is required to recognize in the financial statements the impact of a tax position, if that position is more-likely than-not of being sustained on audit, based on the technical merits of the position. The Company recorded a net benefit for unrecognized tax benefits in 2025 of $4.2 million.

The Company has a tax position for which it is reasonably possible that the total amount of gross unrecognized tax benefits will decrease within the next year. The unrecognized tax benefits may increase or change during the next year for items that arise in the ordinary course of business.

As of December 31, 2025, the total amount of gross unrecognized tax benefits was $23.5 million, of which $21.8 million, if recognized, would impact the Company’s effective tax rate.

A tabular reconciliation of the total amounts of unrecognized tax benefits for the years presented was as follows (in thousands):

The Company includes interest and penalties related to unrecognized tax benefits within the income tax provision. In the years ended December 31, 2025, 2024 and 2023, the total amount of gross interest and penalties accrued was $6.6 million, $6.1 million and $2.9 million, respectively. Both the unrecognized tax benefits and the associated interest and penalties that are not expected to result in payment or receipt of cash within one year are classified as other non-current liabilities in the consolidated balance sheets. In connection with tax matters, the Company’s interest and penalty expense recognized in 2025, 2024 and 2023 in the consolidated statements of operations was $0.4 million, $2.3 million and $3.8 million, respectively.

The Company’s tax returns continue to remain effectively subject to examination by U.S. federal authorities for the years 2006 and onwards and by California state authorities for the years 2006 and onwards due to use and carryovers of net operating losses and tax credits.

For the years ended December 31, 2025,and 2024, benefits recognized from the AMPTC of $238.7 million, and $157.5 million, respectively, were recorded as a prepaid income tax of $227.5 million and $94.9 million (included in Prepaid Expenses and Other Assets), reduction of income tax payable of $11.2 million and $62.7 million on the consolidated balance sheet for the year ended December 31, 2025 and 2024, respectively, and as a reduction to cost of revenues of $238.7 million and $157.5 million on the consolidated statements of operations for the year ended December 31, 2025 and 2024, respectively. Amounts recognized in the consolidated financial statements are based on management’s judgement and interpretation of the most current guidance.

In July 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law, extending key provisions of 2017 Tax Act while scaling back clean energy tax incentives of the IRA. The OBBBA brought back accelerated depreciation for property acquired and placed in service after January 19, 2025, and restored expensing of domestic research expenditures for years beginning after December 31, 2024. Additionally, the bill also amended international tax provisions on global intangible low-tax income, foreign derived intangible income, and base erosion and anti-abuse tax.

Among the significant changes to the clean energy provisions are those related to the repeal of the Section 25D residential solar incentive tax credit starting after December 31, 2025, and the Section 48E tax credit after December 31, 2027, if construction is not started within 12 months of the enactment. The OBBBA expanded the new non-Foreign Entity of Concern requirements to the Section 45X tax credit, denying tax credits for projects owned or controlled by certain foreign entities or that use components from or make payments to these foreign entities.

On October 1, 2025, the Governor of California signed Senate Bill 302 (“SB 302”) into law. SB 302 provides a gross income exclusion for taxpayers that either elect to receive direct payments from the Internal Revenue Service or receive payment from transfer of certain federal clean energy tax credits beginning tax years on or after January 1, 2026, and before January 1, 2031. The Company is currently evaluating the impacts of SB 302 on its condensed consolidated financial statements.

The Company made net tax payments during the year ended December 31, 2025 as follows:

17. CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

The Company is potentially subject to financial instrument concentration of credit risk through its cash, cash equivalents, restricted cash, marketable securities, accounts receivable and loan receivables. The Company places its cash, cash equivalents, restricted cash and marketable securities with high quality institutions and performs periodic evaluations of their relative credit standing.

Accounts receivable can be potentially exposed to a concentration of credit risk with its major customers. As of December 31, 2025, amounts due from three customers represented approximately 31%,22% and 14% of the total accounts receivable balance, as compared to one customer represented approximately 43% of the total accounts receivable balance as of December 31, 2024.

In the years ended December 31, 2025, 2024 and 2023, one customer accounted for approximately 39%,48% and 40%, respectively, of the Company’s net revenues.

18. NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed in a similar manner, but it also includes the effect of potential common shares outstanding during the period, when dilutive.

The following table presents the computation of basic and diluted net income per share for the periods presented:

Diluted earnings per share for the year ended December 31, 2025 includes the dilutive effect of potentially dilutive common shares by application of the treasury stock method for stock options, RSUs, PSUs, ESPP, and includes potentially dilutive common shares by application of the if-converted method for the Notes due 2026 and the Notes due 2028. Diluted earnings per share for the year ended December 31, 2024 includes the dilutive effect of potentially dilutive common shares by application of the treasury stock method for stock options, RSUs, PSUs, ESPP, Notes due 2025, and includes potentially dilutive common shares by application of the if-converted method for the Notes due 2026 and Notes due 2028. Potentially dilutive common shares for the year ended December 31, 2023 include stock options, RSUs, PSUs, ESPP, Notes due 2023, Notes due 2026, Notes due 2028 and the 2025 Warrants. To the extent these potential common shares are antidilutive, they are excluded from the calculation of diluted net income per share.

The Company under the relevant sections of the indenture, irrevocably may elect to settle principal in cash and any excess conversion value in cash or shares of the Company’s common stock for the Notes due 2028. If and when the Company makes such election, there would be no adjustment to net income and the Company would use the average share price to determine the potential number of shares issuable upon an assumed conversion to be included in the diluted share count.

The Notes due 2026 are convertible at any time from September 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date of March 1, 2026. Upon conversion, the Company has elected, on August 28, 2025, to settle the Notes due 2026 with a combination of cash and shares of the Company’s common stock, whereby the principal amount would be settled in cash and any excess conversion value would be settled in shares of the Company's common stock. As a result, after the election date, there is no adjustment to net income and the Company uses the average share price to determine the potential number of shares issuable upon an assumed conversion to be included in the diluted share count.

The following outstanding shares of common stock equivalents were excluded from the calculation of the diluted net income per share attributable to common stockholders because their effect would have been antidilutive:

19. SEGMENT AND GEOGRAPHIC INFORMATION

The Company’s chief operating decision maker is the Chief Executive Officer (the “CEO”). The Company hasone business activity, which entails the design, development, manufacture and sale of solutions for the solar PV industry. There are no segment managers who are held accountable for operations, operating results or plans for levels or components below the consolidated unit level. Accordingly, management has determined that the Company has a single operating and reportable segment. The accounting policies related to operating and reportable segments are the same as those described in Note 2, “Summary of Significant Accounting Policies”. The primary measure of segment profit or loss is consolidated net income as presented below and is used by the CEO for the purpose of evaluating segment performance and allocation of budget to support business expansion, new product development and operational efficiencies.

(1) Represents consolidated cost of revenue, excluding stock-based compensation, acquisition related amortization and income-based government grants. Effective the fourth quarter of 2025, the CEO no longer reviews incremental cost for manufacturing in the United States due to tariff impact of products manufactured in India.

(2) Represents consolidated restructuring and asset impairment charges, excluding stock-based compensation.

(3) Represents consolidated research and development, excluding stock-based compensation.

(4) Represents consolidated sales and marketing, excluding stock-based compensation and acquisition related amortization.

(5) Represents consolidated general and administrative, excluding stock-based compensation.

See Note 3. “Revenue Recognition,” for the table presenting net revenues (based on the destination of shipments). The following table presents long-lived assets by geographic region as of the periods presented:

Long-Lived Assets

The segment assets are not reviewed by the CODM at a different asset level or category and is reviewed at the consolidated level.

20. RELATED PARTY

In September 2025, the Company invested $6.3 million in cash to purchase convertible notes with an aggregate principal amount of $7.0 million issued by SunPower. The CEO of SunPower also serves as a member of the Company’s Board of Directors, and therefore this transaction constitutes a related party transaction. The notes bear an interest rate of 7% per annum and mature on July 1, 2029. The initial conversion rate is 467.8363 shares of SunPower common stock per $1,000 principal amount of notes (equivalent to a conversion price of approximately $2.14 per share). The terms of the transaction were reviewed and approved by the Company’s Audit Committee and were determined to be on an arm’s-length basis. See Note 7. “Fair Value Measurements” for additional information related to this purchase.

21. SUBSEQUENT EVENTS

On January 20, 2026, the Company notified employees of actions approved by management to better align the Company’s workforce and cost structure with its business needs and strategic priorities (the “2026 Restructuring Plan”). In connection with the 2026 Restructuring Plan, the Company estimates that it will incur approximately $4.6 million in restructuring and asset impairment charges, of which approximately $4.2 million will be expected to be incurred in the first quarter of 2026 and approximately $3.7 million will be total cash expenditures. The estimated impact of charges related to the 2026 Restructuring Plan is expected to be approximately $3.8 million in employee severance and benefits related to the reduction in headcount affecting less than 6% of the Company's workforce, or approximately 160 employees, $0.7 million in asset impairment charges and $0.1 million related to office closures. Because the 2026 Restructuring Plan was approved and communicated to employees after December 31, 2025, the Company has not recognized any related charges in the consolidated financial statements for the year ended December 31, 2025.