Enphase had yet another record-setting shipment quarter in its microinverter business, a segment it dominates -- but the firm is positioning itself for more.

Calling itself an "energy technology company" and aspiring to build more than just inverters, Enphase has introduced an energy storage system and a home energy management system and has moved fully into the operations and maintenance business with its $2.5 million acquisition of O&M firm Next Phase Solar. CEO Paul Nahi had this type of broad energy offering in mind the first time I interviewed him for Greentech Media, late in the last decade. (I recall the company had a brief flirtation with an Enphase thermostat in pursuit of that broader offering.)

The company shared its fourth-quarter and year-end financial results this afternoon.

Enphase's fourth-quarter 2014 financial highlights

  • Record revenue of $105.2 million, up 57 percent year-over-year
  • Shipped 180 megawatts (AC) of microinverter systems, up 67 percent year-over-year
  • Record non-GAAP gross margin of 33.5 percent

Enphase's 2014 financial highlights

  • Record revenue of $343.9 million, up 48 percent year-over-year
  • Shipped 575 megawatts (AC) of microinverter systems, up 62 percent year-over-year
  • Record non-GAAP gross margin of 33.1 percent
  • Record non-GAAP net income of $2.7 million

Enphase clearly looks to non-GAAP models to better describe its financial health. Under those non-GAAP methods, Enphase was able to declare a full year of profitability for 2014. Using generally accepted accounting practices, Enphase had a net loss for the year totaling $8.1 million. (Similarly, Tesla Motors' Elon Musk chafes at GAAP methods and recently suggested, "Our financials are better than they appear, not worse.")

Kris Sennesael, Enphase CFO, said "We continue to see strong business momentum and year-over-year growth in all our end markets and geographies," adding, "The U.S. residential market remains on fire."

Last week Enphase announced that it had fully jumped into the O&M business with the $2.5 million acquisition of Next Phase Solar, a provider of O&M services for the PV solar industry. NPS has a portfolio of more than 400 megawatts, split about 70 percent commercial solar and 30 percent residential, and had 2014 revenues of $4 million. MJ Shiao, GTM Director of Solar Research, notes, "Enphase is extremely well positioned given the company's market share and its unique access to module-level data." Enphase's CFO said that the NPS deal was "immediately accretive to gross margin."

"Enphase's core U.S. residential market continues to grow tremendously," added Shiao. "Although Enphase's share is being challenged by the emergence of SolarEdge, the speed at which the market is growing certainly gives enough room for many competitors. The adoption and enforcement of NEC 2014 rapid shutdown rules is a major boon for module-level power electronics (MLPE), and all the serious competitors in the U.S. residential space have an MLPE option at this point."

Shiao continued: "Aside from its stiff competition with traditional string inverters and SolarEdge, we're starting to see renewed competition in a new class of MLPE vendors: module manufacturers. SunPower's acquisition of SolarBridge is part of the story, but we're seeing the most interest in LG's proprietary AC module (although admittedly, it's still early in the sales cycle).

When asked about guidance on the energy storage business at Enphase, CEO Paul Nahi noted that the energy storage market is "a tough one" and "doesn't really exist yet." The CEO noted that pricing was "holding up better than expected," however.

Enphase has shipped a cumulative total of 7.2 million microinverters.

Q1 2015 guidance (non-GAAP)

  • Revenue: $84 million to $88 million
  • Gross margin: 31 percent to 33 percent

Enphase stock is up in after-hours trading.


Note that the financial highlight slides are non-GAAP.




Here are the GAAP figures.


Here's the updated GTM Research MLPE taxonomy.


Source: GTM Research report The Microinverter and DC Optimizer Landscape, 2014