Enphase Energy, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements reflecting our current expectations and involves risks and uncertainties. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “aim” or “continue” or the negative of these terms or other comparable terminology. Such statements, include but are not limited to statements regarding: our expectations as to future financial performance, including revenue, cost of revenue, expenses, liquidity, cash requirements, and our ability to maintain and grow our profitability; the capabilities, performance and competitive advantage of our technology and products and planned changes; timing of new product releases, and the anticipated market adoption of our current and future products; expectations regarding the development of our 1.25 megawatt (“MW”) IQ® Solid-State Transformer (“IQ SST”) product for data centers; our expectations regarding, and our ability to meet, demand for our products; our business strategies, including anticipated trends and operating conditions; growth of and development in markets in which we target, and our expansion into new and existing markets; our performance in operations, including our supply chain management and manufacturing operations and timelines; our product quality and customer service; our expectations regarding qualification of our products for domestic content credit under U.S. tax laws and our ability to meet FEOC requirements for our U.S. products; our expectations regarding macroeconomic events and geopolitical developments, including the effects of tariffs, which may impact our business operations, financial performance and the markets in which we, our suppliers, manufacturers and installers operate; our expectations regarding potential growth through engagement in the third-party ownership (“TPO”) market; expectations regarding the increased variability of in the timing of revenue recognition and cash flows related to safe harbor agreements; market risks associated with financial instruments and foreign currency exchange rates; the anticipated benefits and risks relating to acquisitions and investments; and the importance of government incentives for solar products, including the impact of recent changes in the tax laws, rules and regulations. You should be aware that the forward-looking statements contained in this report are based on our current views and assumptions, and are subject to known and unknown risks, uncertainties and other factors that may cause actual events or results to differ materially. For a discussion identifying some of the important factors that could cause actu…

Excerpt shortened here; the source contains the full paragraph.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements reflecting our current expectations and involves risks and uncertainties. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “aim” or “continue” or the negative of these terms or other comparable terminology. Such statements, include but are not limited to statements regarding: our expectations as to future financial performance, including revenue, cost of revenue, expenses, liquidity, cash requirements, and our ability to maintain and grow our profitability; the capabilities, performance and competitive advantage of our technology and products and planned changes; the timing of new product releases, and the anticipated market adoption of our current and future products; expectations regarding the development of our 1.25 megawatt (“MW”) IQ® Solid-State Transformer (“IQ SST”) product for data centers; our expectations regarding, and our ability to meet, demand for our products; our business strategies, including anticipated trends and operating conditions; growth of and development in markets in which we target, and our expansion into new and existing markets; our performance in operations, including our supply chain management and manufacturing operations and timelines; our product quality and customer service; our expectations regarding qualification of our products for domestic content credit under U.S. tax laws and our ability to meet Foreign Entity of Concern (“FEOC”) requirements for our U.S. products; our expectations regarding macroeconomic events and geopolitical developments, including the effects of tariffs, which may impact our business operations, financial performance and the markets in which we, our suppliers, manufacturers and installers operate; our expectations regarding potential growth through engagement in the third-party ownership (“TPO”) market; expectations regarding the increased variability in the timing of revenue recognition and cash flows related to safe harbor agreements; expectations regarding the commercial microinverter market opportunity in the United States; market risks associated with financial instruments and foreign currency exchange rates; and the importance of government incentives for solar products, including the impact of recent changes in the tax laws, rules and regulations. You should be aware that the forward-looking statements contained in this report are based on our current views and assumptions, and are subject to known and unknown risks, uncertainties and other factors that may cause actual events or results to differ materially. For a discussion identifying some…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We are a global energy technology company. We deliver smart, easy-to-use solutions that manage solar generation, storage and communication on one platform. Our intelligent microinverters work with virtually every solar panel made, and when paired with our smart technology, result in one of the industry’s best-performing clean energy systems. As of March 31, 2026, we have shipped approximately 87.8 million microinverters, and more than 5.2 million Enphase residential and commercial systems have been deployed in over 165 countries.

Current wording

We are a global energy technology company. We deliver smart, easy-to-use solutions that manage solar generation, storage and communication on one platform. Our intelligent microinverters work with virtually every solar panel made, and when paired with our smart technology, result in one of the industry’s best-performing clean energy systems. As of June 30, 2026, we have shipped approximately 89.4 million microinverters, and more than 5.3 million Enphase residential and commercial systems have been deployed in over 165 countries.

Previous wording

The OBBBA scales back the Investment Tax Credit (the “ITC”) available under Section 25D of the Internal Revenue Code of 1986, as amended (the “Code”), for residential solar and storage systems purchased through cash or loans. Under the new law, the Section 25D credit expired on December 31, 2025. In addition, the OBBBA imposes new timing requirements for eligibility under Section 48E of the Code, which governs ITCs for leased solar and storage systems. Specifically, solar-only projects that do not commence construction within 12 months of the OBBBA’s enactment must be placed in service by December 31, 2027 in order to remain eligible for the credit. Energy storage projects are not subject to this placed-in-service deadline; however, the ITC for storage systems will begin to phase down in 2034 — decreasing to 75% in 2034, 50% in 2035 and phasing out entirely by 2036.

Current wording

The OBBBA scales back the Investment Tax Credit (the “ITC”) available under Section 25D of the Internal Revenue Code of 1986, as amended (the “Code”), for residential solar and storage systems purchased through cash or loans. Under the new law, the Section 25D credit expired on December 31, 2025. In addition, the OBBBA imposes new timing requirements for eligibility under Section 48E of the Code, which governs ITCs for leased solar and storage systems. Specifically, solar-only projects that did not commence construction within 12 months of the OBBBA’s enactment must be placed in service by December 31, 2027 in order to remain eligible for the credit. Energy storage projects are not subject to this placed-in-service deadline; however, the ITC for storage systems will begin to phase down in 2034 — decreasing to 75% in 2034, 50% in 2035 and phasing out entirely by 2036.

Previous wording

Additionally, the OBBBA introduces new compliance requirements under the Foreign Entity of Concern (“FEOC”) provisions for both Section 48E of the Code and the Advanced Manufacturing Production Tax Credit (“AMPTC”) under Section 45X of the Code. These provisions establish an escalating threshold of non-FEOC content that must be met by solar and storage projects beginning construction in 2026 and by manufactured components produced beginning in 2026.

Current wording

Additionally, the OBBBA introduces new compliance requirements under the FEOC provisions for both Section 48E of the Code and the Advanced Manufacturing Production Tax Credit (“AMPTC”) under Section 45X of the Code. These provisions establish an escalating threshold of non-FEOC content that must be met by solar and storage projects beginning construction in 2026 and by manufactured components produced beginning in 2026.

Previous wording

On July 7, 2025, the President issued an Executive Order directing the Secretary of the Treasury to issue updated guidance within 45 days on the “beginning of construction” requirements applicable to Section 48E projects. In August 2025, Treasury and the IRS issued revised “beginning of construction” guidance for clean energy tax credits that only applies to projects above 1 MW. The Executive Order also requires the Secretary to implement the FEOC restrictions set forth in the OBBBA.

Current wording

In August 2025, U.S. Treasury Department and the Internal Revenue Service (“IRS”) issued revised “beginning of construction” guidance for clean energy tax credits that only applies to Section 48E projects above 1 MW.

Previous wording

In February 2026, the U.S. Department of the Treasury and the Internal Revenue Service (“IRS”) issued guidance under the OBBBA’s FEOC provisions applicable to Sections 48E and 45X of the Code, including rules and interim safe harbors for determining whether projects or manufactured components receive material assistance from prohibited foreign entities. Treasury and the IRS have indicated that additional proposed regulations and safe harbor tables are expected, including guidance addressing ownership, effective control, debt, licensing arrangements and anti‑circumvention matters, which could make the compliance requirements more restrictive over time.

Current wording

In February 2026, the U.S. Treasury Department and the IRS issued guidance under the OBBBA’s FEOC provisions applicable to Sections 48E and 45X of the Code, including rules and interim safe harbors for determining whether projects or manufactured components receive material assistance from prohibited foreign entities. Treasury and the IRS have indicated that additional proposed regulations and safe harbor tables are expected, including guidance addressing ownership, effective control, debt, licensing arrangements and anti‑circumvention matters, which could make the compliance requirements more restrictive over time.

Previous wording

In March 2026, we entered into an agreement for the sale of $235.0 million of AMPTC we generated during 2025 at 93% face value, resulting in a discount of approximately $16.5 million. We also incurred approximately $2.5 million in transaction-related fees.

Current wording

In March 2026, we entered into an agreement for the sale of $235.0 million of AMPTC we generated during 2025 at 93% of face value, resulting in a discount of approximately $16.5 million. We also incurred approximately $2.5 million in transaction-related fees.

Previous wording

Trade Tariff Uncertainties. The impact of new or existing tariffs, trade restrictions or retaliatory actions on us, the solar industry and our customers continue to create uncertainty and impact on our business operations. On February 20, 2026, the United States Supreme Court issued a decision invalidating certain tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"). Following this ruling, the U.S. Court of International Trade issued an order directing U.S. Customs and Border Protection (“CBP”) to establish a process for the submission and review of refund claims related to affected IEEPA tariffs. On April 20, 2026, CBP launched an online portal through which companies may submit IEEPA tariff refund requests. Submitted claims are subject to review and validation by CBP, and the approval, timing, and amount of any refunds remain subject to CBP determination. Based on our submitted refund requests related to tariffs paid during fiscal 2025 and the first quarter of fiscal 2026, we may be eligible to receive tariff refunds. However, because the approval and timing of such refunds remain uncertain and are contingent upon CBP’s review and validation process, no assurance can be given that any refunds will be realized. Furthermore, following the Supreme Court’s decision, the Administration announced the imposition of new global tariffs of up to 15% under the provisions of Section 122 of the Trade Act of 1974.

Current wording

Trade Tariff Uncertainties. The impact of new or existing tariffs, trade restrictions or retaliatory actions on us, the solar industry and our customers continues to create uncertainty and adversely affect our business operations. On February 20, 2026, the United States Supreme Court issued a decision invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). Following this ruling, the U.S. Court of International Trade directed U.S. Customs and Border Protection (“CBP”) to establish a process for the submission and review of refund claims related to eligible IEEPA tariffs. On April 20, 2026, CBP launched an online portal through which companies may submit refund requests for eligible IEEPA tariffs. We received refunds and associated interest of approximately $41.0 million and $11.0 million in the three months ended June 30, 2026 and in July 2026, respectively, from CBP related to tariffs paid during fiscal 2025 and the first quarter of fiscal 2026, of which $45.4 million was recognized as a reduction to cost of revenues during the three and six months ended June 30, 2026, $1.6 million was recognized as interest income in the three and six months ended June 30, 2026, and $5.0 million was capitalized as a cost of inventory as of June 30, 2026.

Previous wording

We have moved a significant portion of our manufacturing to the United States while continuing to utilize contract manufacturing in China and India. However, certain critical components for our products are still sourced from outside the United States. For example, lithium iron phosphate (“LFP”) battery cells used in our storage products are still supplied by two vendors located in China. Although we are in the process of searching for other vendors outside of China for future supplies, the expertise and industry for the LFP battery cell is primarily in China, and it will require significant effort to identify qualified suppliers with the right expertise to develop our battery cells.

Current wording

We have moved a significant portion of our manufacturing to the United States while continuing to utilize contract manufacturing in China and India. However, certain critical components for our products are still sourced from outside the United States. For example, lithium iron phosphate (“LFP”) battery cells used in our storage products are still supplied solely by two vendors located in China. Although we are in the process of searching for other vendors outside of China for future supplies, the expertise and industry for the LFP battery cell is primarily in China, and it will require significant effort to identify alternative, qualified suppliers with the right expertise to develop our battery cells.

Previous wording

Safe Harbor Agreements. During the year ended December 31, 2025, and continuing year‑to‑date through the date of this filing on April 28, 2026, we expanded our engagement in the TPO market through the execution of additional safe harbor agreements with solar and battery financing companies that offer lease and power purchase agreement structures to homeowners. These arrangements are designed to support customers’ qualification for investment tax credits and have become an increasingly important growth channel for U.S. residential solar and battery adoption following the expiration of the residential Investment Tax Credit under Section 25D of the Code on December 31, 2025.

Current wording

Safe Harbor Agreements. We executed agreements year-to-date through the safe harbor deadline with TPO customers for products totaling approximately $1,081.1 million, of which $202.4 million is under the ITC Five Percent Safe Harbor method and $878.6 million is under the Physical Work Test beginning-of-construction method. These arrangements are designed to support customers’ qualification for ITC and have become an increasingly important growth channel for U.S. residential solar and battery adoption following the expiration of the residential ITC under Section 25D of the Code on December 31, 2025.

Previous wording

Year‑to‑date, we executed agreements with TPOs for products totaling approximately $843.6 million, including approximately $89.6 million under the Investment Tax Credit Five Percent Safe Harbor method and approximately $754.0 million under the Physical Work Test beginning‑of‑construction method. Product deliveries and revenue recognition associated with these arrangements may occur over multiple periods and are dependent on the timing of product shipment and satisfaction of performance obligations. As a result, the timing and structure of these safe harbor arrangements have contributed to increased variability in the timing of revenue recognition and cash flows between reporting periods.

Current wording

As of June 30, 2026, contract liabilities included in deferred revenues, current and deferred revenues, non-current on the condensed consolidated balance sheet includes approximately $105.8 million prepayments or billings under the ITC Five Percent Safe Harbor method for products to be delivered in the third and fourth quarters of 2026, and approximately $45.6 million prepayments or billings under the Physical Work Test beginning-of-construction method. Product deliveries and revenue recognition associated with these arrangements may occur over multiple periods through the second quarter of 2031 and are dependent on the timing of product shipment and satisfaction of performance obligations. As a result, the timing and structure of these safe harbor arrangements have contributed to increased variability in the timing of revenue recognition and cash flows between reporting periods.

Previous wording

Demand for Products. The prolonged softness in demand in the solar industry has continued to adversely impact certain distributors and installers, contributing to reduced liquidity, bankruptcies and business closures across the channel. These disruptions have negatively affected our revenue and profitability and could result in higher allowances for credit losses in the future. In Europe, the overall business environment across the region is still challenging, and is expected to remain constrained in 2026. In the United States, uncertainty related to changes in legislation, including from the OBBBA, which eliminates or reduces existing tax credits for clean energy programs, as well as evolving U.S. trade and tariff policies, may further contribute to market volatility and adversely impact customer demand for our products, pricing and our financial performance.

Current wording

Demand for Products. The prolonged softness in demand in the solar industry has continued to adversely impact certain distributors and installers, contributing to reduced liquidity, bankruptcies and business closures across the channel. These disruptions have negatively affected our revenue and profitability and could result in higher allowances for credit losses in the future. In Europe, the overall business environment across the region is still challenging, and is expected to remain constrained in 2026. In the United States, uncertainty related to changes in legislation, including from the OBBBA, which eliminated or reduced existing tax credits for clean energy programs, as well as evolving U.S. trade and tariff policies, may further contribute to market volatility and adversely impact customer demand for our products, pricing and our financial performance.

Previous wording

IQ Microinverters. We ship IQ8™ Microinverters into 58 countries worldwide. Our IQ8P 3P™ Microinverters, with peak output power of 480 W AC, are designed to maximize energy production and can manage a continuous DC current of 14 amperes, supporting higher powered solar modules through increased energy harvesting. These microinverters are offered for residential and small commercial applications in North America and for grid-tied applications in South Africa, Mexico, Brazil, India, Thailand, the Philippines, France, Spain, Switzerland, the United Kingdom, Italy, Portugal, Poland, Turkey, Colombia, Panama, Costa Rica, Vietnam, Malaysia, Australia and 13 Caribbean countries.

Current wording

IQ Microinverters. We ship IQ8™ Microinverters into 58 countries worldwide. Our IQ8P™ Residential Microinverters and IQ8P-3P™ Commercial Microinverters, with peak output power of 480 W AC, are designed to maximize energy production and can manage a continuous DC current of 14 amperes, supporting higher powered solar modules through increased energy harvesting. The IQ8P-3P Commercial Microinverter is offered for commercial and industrial applications in North America, Mexico, Colombia, Panama, Costa Rica and 13 Caribbean countries. The IQ8P Residential Microinverter is offered for residential and small commercial applications in North America and for grid-tied applications in South Africa, Mexico, Brazil, India, Thailand, the Philippines, France, Spain, Switzerland, the United Kingdom, Italy, Portugal, Poland, Turkey, Colombia, Panama, Costa Rica, Vietnam, Malaysia, Australia, Fiji, and 13 Caribbean countries.

Previous wording

We began shipping our new IQ9N-3P™ Commercial Microinverter in December 2025. This is the first microinverter powered by advanced gallium nitride technology and designed for three-phase 480Y/277 V (wye) grid configurations, without using external transformers. The IQ9N-3P Commercial Microinverter helps simplify design complexity, lowers installation and balance of system costs, and improves system efficiency for 480 V commercial projects.

Current wording

We began shipping our new IQ9N-3P™ Commercial Microinverter in December 2025. This is the first microinverter powered by advanced gallium nitride (“GaN”) technology and designed for three-phase 480Y/277 V (wye) grid configurations, without using external transformers. The IQ9N-3P Commercial Microinverter helps simplify design complexity, lowers installation and balance of system costs, and improves system efficiency for 480 V commercial projects.

Previous wording

We ship our IQ8HC™ Microinverters, IQ8X™ Microinverters, IQ8P-3P Commercial Microinverters, IQ9N-3P Commercial Microinverters, IQ® Battery 5Ps and IQ®Battery 10Cs supplied from manufacturing facilities in the United States with higher domestic content than previous models, that when paired with other U.S.-made solar equipment could qualify for the domestic content bonus tax credit under the Inflation Reduction Act of 2022.

Current wording

We ship our IQ8HC™ Microinverters, IQ8X™ Microinverters, IQ8P-3P Commercial Microinverters, IQ9N-3P Commercial Microinverters, IQ9S-3P Commercial Microinverters, IQ9N Residential Microinverters, IQ® Battery 5Ps and IQ®Battery 10Cs supplied from manufacturing facilities in the United States with higher domestic content than previous models, that when paired with other U.S.-made solar equipment may qualify for the domestic content bonus tax credit under the Inflation Reduction Act of 2022.

Previous wording

We continue to expand the deployment of the IQ Battery 5P with FlexPhase™, an AC-coupled, modular 5 kWh battery with 3.84 kVA of continuous power per unit, for both single-phase and three-phase applications. The product is currently shipping to Austria, Germany, Switzerland, Luxembourg, Poland, France, Spain, Portugal, the Netherlands, Greece, Romania, Croatia, Finland, Malta, Estonia, India, Belgium, Slovenia, Slovakia, Denmark, Latvia, Lithuania, Sweden, Hungary, Bulgaria and Australia. The standard IQ Battery 5P continues to ship in the

Current wording

We continue to expand the deployment of the IQ Battery 5P with FlexPhase™ technology, an AC-coupled, modular 5 kWh battery with 3.84 kVA of continuous power per unit, for both single-phase and three-phase applications. This product is currently shipping to Austria, Germany, Switzerland, Luxembourg, Poland, France, Spain, Portugal, the Netherlands, Greece, Romania, Croatia, Finland, Malta, Estonia, India, Belgium, Slovenia, Slovakia, Denmark, Latvia, Lithuania, Sweden, Hungary, Bulgaria, North Macedonia, and Australia. The standard IQ Battery 5P continues to ship in the United States, Cayman Islands, Australia, New Zealand, Puerto Rico, Mexico, Canada, the United Kingdom, Italy, France, the Netherlands, Luxembourg, Belgium, Romania and India. These Enphase IQ Batteries in Europe can be installed with both single-phase and three-phase third-party solar energy inverters, enabling homeowners to upgrade their existing home solar systems with a residential battery storage solution that reduces costs while providing increased self-reliance.

Previous wording

In December 2025, we launched our PowerMatch™ technology, a battery software upgrade in Europe. PowerMatch intelligently adjusts IQ Battery output to match a home’s real-time power needs, delivering more usable energy, longer battery life and greater long-term savings. The efficiency gains achieved with this technology can improve battery performance by as much as 40%.

Current wording

In December 2025, we launched our PowerMatch™ technology, a battery software upgrade in Europe. PowerMatch intelligently adjusts IQ Battery output to match a home’s real-time power needs by activating only the microinverters needed, delivering more usable energy, higher efficiency, longer battery life and greater long-term savings. The efficiency gains achieved with this technology can improve battery performance by as much as 40%. In May 2026, we expanded PowerMatch technology to North America, making it available to homeowners with qualifying IQ Battery systems in the United States and Canada.

Previous wording

New Products in Development. On April 28, 2026, we announced that we are developing our 1.25 MW IQ SST product for data centers, a distributed solid-state transformer platform designed to convert medium-voltage AC directly to low-voltage DC in a single stage. The IQ SST will be built as a supercluster of 342 power modules, with each module powered by our custom Kestrel ASIC and high-frequency GaN-based power platform. The architecture is designed to deliver native 800 V DC output for next-generation AI racks, fast response on the order of 1 to 3 milliseconds, built-in redundancy, and serviceability through hot-swappable modules. We have completed feasibility, built working power modules, converged on the system design, and have more than 80 engineers working on the program. We expect full system demonstrations late this year, customer pilots in 2027 and volume shipments in 2028.

Current wording

New Products in Development. In April 2026, we announced that we are developing our 1.25 MW IQ SST product for data centers, a distributed solid-state transformer platform designed to convert medium-voltage AC directly to low-voltage DC in a single stage. The IQ SST will be built as a supercluster of 342 power modules, with each module powered by our custom Kestrel ASIC and high-frequency GaN-based power platform. The architecture is designed to deliver native 800 V DC output for next-generation AI racks, fast response on the order of 1 to 3 milliseconds, built-in redundancy, and serviceability through hot-swappable modules. We expect full system demonstrations later this year.

Previous wording

Net revenues decreased by $73.2 million, or 21%, in the three months ended March 31, 2026, as compared to the same period in 2025, driven primarily by a 39% decrease in IQ Batteries MWh shipped and 8% decrease in microinverter units sold. During the three months ended March 31, 2026, we sold approximately 1.4 million microinverter units and shipped 103.1 MWh of IQ Batteries, as compared to approximately 1.5 million microinverter units and 170.1 MWh of IQ Batteries shipped in the three months ended March 31, 2025.

Current wording

Net revenues decreased by $71.3 million, or 20%, in the three months ended June 30, 2026, as compared to the same period in 2025, driven primarily by a 40% decrease in IQ Batteries MWh shipped and product price decreases, partially offset by a 4% increase in microinverter units sold. During the three months ended June 30, 2026, we sold approximately 1.6 million microinverter units and shipped 113.8 MWh of IQ Batteries, as compared to approximately 1.5 million microinverter units and 190.9 MWh of IQ Batteries shipped in the three months ended June 30, 2025.

Previous wording

Net revenues in the United States were $233.9 million in the three months ended March 31, 2026, as compared to $263.2 million in the same period in 2025, a decrease of $29.3 million, or 11%, primarily due to the expiration of the federal residential clean energy tax credit under Section 25D of the Internal Revenue Code. Microinverter shipments that are associated with safe harbor transactions with customers were $34.5 million and $54.3 million in the three months ended March 31, 2026 and 2025, respectively.

Current wording

Net revenues in the United States were $226.9 million in the three months ended June 30, 2026, as compared to $271.3 million in the same period in 2025, a decrease of $44.4 million, or 16%, primarily due to the expiration of the federal residential clean energy tax credit under Section 25D of the Internal Revenue Code. Microinverter shipments that are associated with safe harbor transactions with customers were $84.3 million and $40.4 million in the three months ended June 30, 2026 and 2025, respectively.

Previous wording

Net revenues from international markets were $49.0 million in the three months ended March 31, 2026, as compared to $92.8 million in the same period in 2025, a decrease of $43.9 million, or 47%, primarily driven by lower shipments to customers in Europe driven by continued softening in demand and delayed purchasing activity. In addition, demand in certain European markets was impacted by macroeconomic conditions, regulatory and incentive framework transitions, and lower electricity prices compared to the same period in 2025, which reduced near‑term installation activity and delayed project starts.

Current wording

Net revenues from international markets were $65.0 million in the three months ended June 30, 2026, as compared to $91.8 million in the same period in 2025, a decrease of $26.8 million, or 29%, primarily driven by lower shipments to customers in Europe driven by continued softening in demand and delayed purchasing activity. In addition, demand in certain European markets was impacted by macroeconomic conditions, regulatory and incentive framework transitions, and lower electricity prices compared to the same period in 2025, which reduced near‑term installation activity and delayed project starts.

Previous wording

Cost of revenues decreased by $5.3 million, or 3%, for the three months ended March 31, 2026, as compared to the same period in 2025. This decrease was primarily driven by a decreased in MWh of IQ Batteries and microinverter units shipped and lower tariffs.

Current wording

Cost of revenues decreased by $75.8 million, or 39%, for the three months ended June 30, 2026, as compared to the same period in 2025. This decrease was primarily driven by $45.4 million IEEPA tariff refunds and a 40% decrease in IQ Batteries MWh shipped.

Previous wording

This decrease in cost of revenues was partially offset by $18.9 million loss from the sale of tax credits generated during 2025 and $5.2 million reduction in fair value of AMPTC generated during the three months ended March 31, 2026. The AMPTC generated in the three months ended March 31, 2026 and 2025 was $59.8 million and $53.6 million, respectively, and after taking into account the total fair value adjustments of the AMPTC of $24.1 million and zero, respectively, the net benefit from the AMPTC generated reducing cost of revenues was $35.7 million and $53.6 million, respectively.

Current wording

This decrease in cost of revenues was partially offset by a $18.9 million loss from the sale of tax credits generated during 2025.

Previous wording

Gross margin decreased by 11.7 percentage points in the three months ended March 31, 2026, as compared to the same period in 2025. The decrease was primarily due to 6.7 percentage points from the sale of tax credits generated during 2025, 1.8 percentage points from reduction in fair value of AMPTC generated during the three months ended March 31, 2026, and lower shipment volumes of microinverters and IQ Batteries, which resulted in unfavorable absorption of fixed manufacturing and supply chain costs over a lower revenue base, partially offset by lower tariffs.

Current wording

Gross margin increased by 0.8 percentage points in the six months ended June 30, 2026, as compared to the same period in 2025. The increase was primarily due to 7.9 percentage points from the IEEPA tariff refunds, partially offset by 3.3 percentage points from the sale of tax credits generated during 2025, and lower shipment volumes of microinverters and IQ Batteries, which resulted in unfavorable absorption of fixed manufacturing and supply chain costs over a lower revenue base.

Previous wording

Research and development expense decreased by $5.3 million, or 11%, in the three months ended March 31, 2026, as compared to the same period in 2025. The decrease was primarily due to actions in connection with the restructuring initiatives implemented at the beginning of 2026 that lowered personnel-related expenses as a result of a reduction in headcount by $4.5 million, lowered professional services costs by $0.4 million and other equipment costs by $0.4 million. The amount of research and development expenses may fluctuate from period to period due to the differing levels and stages of development activity for our products.

Current wording

Research and development expense decreased by $5.1 million, or 5%, in the six months ended June 30, 2026, as compared to the same period in 2025. The decrease was primarily due to actions in connection with the restructuring initiatives implemented at the beginning of 2026 that lowered personnel-related expenses as a result of a reduction in headcount by $5.6 million, partially offset by higher professional services costs of $0.4 million. The amount of research and development expenses may fluctuate from period to period due to the differing levels and stages of development activity for our products.

Previous wording

Sales and marketing expense decreased by $0.9 million, or 2%, in the three months ended March 31, 2026, as compared to the same period in 2025. The decrease was primarily due to actions in connection with the restructuring initiatives implemented at the beginning of 2026 that lowered personnel-related expenses as a result of moving certain functions to more cost efficient regions and leveraging advanced artificial intelligence tools.

Current wording

Sales and marketing expense decreased by $5.2 million, or 10%, in the three months ended June 30, 2026, as compared to the same period in 2025. The decrease was primarily due to actions in connection with the restructuring initiatives implemented at the beginning of 2026 that lowered personnel-related expenses by $4.4 million and professional services, advertising and corporate expenses by $0.7 million as a result of moving certain functions to more cost efficient regions and leveraging advanced artificial intelligence tools.

Previous wording

General and administrative expense decreased by $0.8 million, or 2%, in the three months ended March 31, 2026, as compared to the same period in 2025. The decrease was primarily due to actions in connection with the restructuring initiatives implemented at the beginning of 2026 that lowered personnel-related expenses by $1.3 million and lowered equipment costs by $0.5 million, partially offset by advisory and legal fees of $1.0 million.

Current wording

General and administrative expense decreased by $2.7 million, or 8%, in the three months ended June 30, 2026, as compared to the same period in 2025. The decrease was primarily due to actions in connection with the restructuring initiatives implemented at the beginning of 2026 that lowered personnel-related expenses by $1.9 million and lowered equipment and other corporate costs by $0.8 million.

Previous wording

Restructuring and asset impairment charges of $3.8 million in the three months ended March 31, 2026, primarily consisted of $3.5 million of employee related expenses and $0.3 million of contract termination charges. Restructuring and asset impairment charges of $3.2 million in the three months ended March 31, 2025, primarily consisted of employee severance, one-time benefits and other employee related expenses.

Current wording

Restructuring and asset impairment charges of $1.0 million in the three months ended June 30, 2026, primarily consisted of employee related expenses. Restructuring charges of $3.3 million in the three months ended June 30, 2025, primarily consisted of $1.5 million of asset impairment charges, $1.0 million of employee related expenses and $0.8 million of contract termination charges.

Previous wording

Interest income of $12.6 million decreased in the three months ended March 31, 2026, as compared to $17.0 million in the three months ended March 31, 2025, primarily due to lower average cash, cash equivalents and marketable securities, and lower interest rates.

Current wording

Interest income of $12.2 million decreased in the three months ended June 30, 2026, as compared to $14.9 million in the three months ended June 30, 2025, primarily due to lower average cash, cash equivalents and marketable securities, and lower interest rates.

Previous wording

Interest expense of $0.6 million in the three months ended March 31, 2026, primarily included amortization of debt issuance costs with the Notes due 2026 and the Notes due 2028. Interest expense of $2.0 million in the three months ended March 31, 2025, primarily included $2.0 million for coupon interest, debt discount amortization for the Notes due 2025 and amortization of debt issuance costs for the Notes due 2025, the Notes due 2026 and the Notes due 2028.

Current wording

Interest expense of $1.0 million in the six months ended June 30, 2026, primarily included amortization of debt issuance costs with the Notes due 2026 and the Notes due 2028. Interest expense of $2.9 million in the six months ended June 30, 2025, primarily included the coupon interest, debt discount amortization with the Notes due 2025, and amortization of debt issuance costs with the Notes due 2025, Notes due 2026 and Notes due 2028, and other interest.

Previous wording

Other income, net, of $3.8 million in the three months ended March 31, 2026, primarily consisted of $1.7 million gain related on the sale of patents, a $1.4 million realized gain from sale of marketable securities, and a $0.8 million net foreign currency gain from remeasurement of monetary assets and liabilities, partially offset by $0.1 million decrease in the fair value of our tax equity fund investment.

Current wording

Other income, net of $2.3 million in the six months ended June 30, 2026, primarily consisted of $1.6 million tariff interest refund, $1.4 million realized gain from sale of marketable securities, $1.7 million gain related to the sale of patents, and $0.4 million net foreign currency gain from remeasurement of monetary assets and liabilities, partially offset by $2.4 million non-cash expense related to change in the fair value of debt securities and $0.2 million decrease in the fair value of our tax equity fund investment. Other expense, net, of $8.9 million in the six months ended June 30, 2025, primarily consisted of $9.1 million non-cash expense related to change in the fair value of debt securities and $0.1 million in realized loss on investments, partially offset by $0.3 million net gain due to foreign currency denominated monetary assets and liabilities.

Previous wording

The income tax benefit for the three months ended March 31, 2026 was calculated using the annualized effective tax rate method and primarily reflects tax benefits associated with U.S. operating losses and the generation of AMPTC. While the AMPTC is directly related to qualifying production and shipment activity and pretax income, it is treated as permanent items for income tax accounting purposes and is excluded from the annualized effective tax rate calculation. As a result, our effective tax rate for the period reflects the impact of these permanent benefits and may not be indicative of the statutory tax rate or expected annual effective tax rate.

Current wording

The income tax provision for the three months ended June 30, 2026 was calculated using the annualized effective tax rate method and primarily reflects tax benefits associated with the impact of the AMPTC. While AMPTC is directly related to qualifying production and shipment activity and pretax income, it is treated as permanent items for income tax accounting purposes and is excluded from the annualized effective tax rate calculation. As a result, our effective tax rate for the period reflects the impact of these permanent benefits and may not be indicative of the statutory tax rate or expected annual effective tax rate.

Previous wording

For the three months ended March 31, 2026, we recorded an income tax benefit of $6.5 million, compared to an income tax provision of $17.2 million in the same period in 2025. This $23.6 million change primarily reflects the change from pretax income in the prior‑year period to a pretax loss in the current‑year period, principally in the United States.

Current wording

For the six months ended June 30, 2026, we recorded an income tax provision of $19.4 million, as compared to an income tax provision of $22.3 million in the same period in 2025. This $3.0 million change primarily reflects the lower profitability in current-year period, principally in the United States, and tax effects related to the IEEPA tariff refund.

Previous wording

These benefits were partially offset by tax expense in profitable foreign jurisdictions and tax expense related to equity‑based compensation shortfalls, which were generally consistent with the prior‑year period. We continue to apply the interim income tax methodology prescribed by ASC 740‑270.

Current wording

These benefits were partially offset by tax expense in profitable foreign jurisdictions and tax expense related to equity‑based compensation shortfalls, which were generally consistent with the prior‑year period, and tax effects of the IEEPA tariff refund. We continue to apply the interim income tax methodology prescribed by ASC 740‑270.

Previous wording

As of March 31, 2026, we had $1.3 billion in net working capital, including cash, cash equivalents and marketable securities of $930.6 million, of which $788.5 million were held in the United States. Our cash, cash equivalents and marketable securities primarily consist of U.S. Government agency securities and treasuries, money market mutual funds, corporate notes and bonds, commercial paper and certificates of deposit, and both interest-bearing and non-interest-bearing deposits, with the remainder held in various foreign subsidiaries. We consider amounts held outside the United States to be accessible and have provided for the estimated withholding tax liability on the repatriation of our foreign earnings.

Current wording

As of June 30, 2026, we had $1.4 billion in net working capital, including cash, cash equivalents and marketable securities of $937.7 million, of which $766.8 million was held in the United States. Our cash, cash equivalents and marketable securities primarily consist of U.S. Government agency securities and treasuries, money market mutual funds, corporate notes and bonds, commercial paper and certificates of deposit, and both interest-bearing and non-interest-bearing deposits, with the remainder held in various foreign subsidiaries. We consider amounts held outside the United States to be accessible and have provided for the estimated withholding tax liability on the repatriation of our foreign earnings.

Previous wording

Our cash, cash equivalents and marketable securities decreased by $601.2 million from March 31, 2025 to March 31, 2026, primarily due to payoff of the Notes due 2026, repurchases of common stock pursuant to our share repurchase program, investments in private and public companies, issuance of loan receivables and payments of withholding taxes related to net share settlement of equity awards, partially offset by cash generated from operations and the sale of AMPTC we generated during 2025.

Current wording

Our cash, cash equivalents and marketable securities decreased by $592.5 million from June 30, 2025 to June 30, 2026, primarily due to payoff of the Notes due 2026, investments in private and public companies, issuance of loan receivables and payments of withholding taxes related to net share settlement of equity awards, partially offset by cash generated from operations and the sale of AMPTC we generated during 2025 and the first quarter of 2026.

Previous wording

Total carrying amount of debt decreased by $629.4 million from March 31, 2025 to March 31, 2026, primarily due to the payoff of the Notes due 2026, partially offset by accretion of issuance costs.

Current wording

Total carrying amount of debt decreased by $629.9 million from June 30, 2025 to June 30, 2026, primarily due to the payoff of the Notes due 2026, partially offset by accretion of issuance costs.

Previous wording

For the long-term period (beyond 12 months), we plan to continue growing cash flows from operations and sale of AMPTC to support our business operations and strategic investment plans. We regularly evaluate our liquidity position, debt obligations and anticipated cash needs. As part of this ongoing assessment, we may pursue additional financing through the issuance of equity or the debt financing, as necessary, to support our operational and investment needs.

Current wording

For the long-term period (beyond 12 months), we plan to continue growing cash flows from operations and sale of AMPTC to support our business operations and strategic investment plans. We regularly evaluate our liquidity position, debt obligations and anticipated cash needs. As part of this ongoing assessment, we may pursue additional financing through the issuance of equity or debt, as necessary, to support our operational and investment needs.

Previous wording

Repurchase of Common Stock. In July 2023, our board of directors authorized the 2023 Repurchase Program pursuant to which we were authorized to repurchase up to $1.0 billion of our common stock. The repurchases could be funded from available working capital and marketable securities and could be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. The 2023 Repurchase Program may be discontinued or amended at any time and expires on July 26, 2026. As of March 31, 2026, we had $268.7 million remaining for repurchasing shares under the 2023 Repurchase Program.

Current wording

Repurchase of Common Stock. In July 2023, our board of directors authorized the 2023 Repurchase Program pursuant to which we could repurchase up to $1.0 billion of our common stock. Repurchases were funded from available working capital and marketable securities and were executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including under Rule 10b5-1 plans. As of June 30, 2026, $268.7 million remained available for share repurchases under the 2023 Repurchase Program. In July 2026, our board of directors authorized an extension of the term of the 2023 Repurchase Program. The expiration date of the 2023 Repurchase Program was extended from July 26, 2026 to July 26, 2029, unless terminated earlier by the board of directors. All other terms of the 2023 Repurchase Program remain unchanged.

Previous wording

Operating Leases. We have entered into various non-cancelable operating leases primarily for our facilities with original lease periods expiring through the year 2034, with the most significant leases relating to our offices in Petaluma, California, Arlington, Texas and Bengaluru, India. As of March 31, 2026, we had total operating lease obligations of $39.6 million recorded on our condensed consolidated balance sheet.

Current wording

Operating Leases. We have entered into various non-cancelable operating leases primarily for our facilities with original lease periods expiring through the year 2034, with the most significant leases relating to our offices in Fremont and Petaluma, California, Arlington, Texas and Bengaluru, India. As of June 30, 2026, we had total operating lease obligations of $40.5 million recorded on our condensed consolidated balance sheet.