Solar module-level electronics rivals SolarEdge and Enphase reported their respective first-quarter earnings on Tuesday, allowing for a side-by-side comparison of their financial results.
Both of these firms were founded in roughly the same era and both tenaciously pioneered their respective module-level solutions. Both venture funded firms grew spectacularly and managed to reach the promised land of an initial public offering.
That's where the companies' respective performances seem to diverge. Both firms grew fast, along with the exploding residential solar market, but SolarEdge has been more inclined to make a consistent profit at a sustainable margin while showing growth and accurately meeting or exceeding guidance. Enphase has struggled to cut costs and keep up with the price declines across the residential solar supply stack -- resulting in very slim margins and consistent quarterly losses.
Stripping away the aspirational CEO rhetoric, here are the earnings numbers and their brutal truth.
Guy Sella, CEO of SolarEdge: “In a quarter where the PV market is exhibiting decline in the United States, we have increased our revenues, profitability and cash flow generation quarter-over-quarter. Much of this is attributed to increased sales in Europe and our growing worldwide geographic spread.” He added, “We are confident that with our financial strength, cash balance and substantial R&D capabilities, we are well positioned to continue to increase revenues in existing markets and new markets as we see fit.”
Paul Nahi, CEO of Enphase, was less sanguine: "The first quarter of 2017 turned out to be more challenging than expected, and we were certainly disappointed with our financial results."
During the first quarter of 2017, Enphase sold approximately 138 megawatts (AC), amounting to approximately 573,000 microinverters, a decrease in megawatts of 30 percent sequentially and 6 percent on a year-over-year basis. SolarEdge shipped 455 megawatts (AC) of inverters in the quarter, up from 413 megawatts (AC) of inverters shipped in the previous quarter.
Enphase's new IQ6 model started shipping and according to the firm will "probably" meet cost targets set in 2015. Enphase's seventh-generation microinverter "is on track to begin shipping at the end of this year." The firm said it is not planning on raising additional capital.
Despite the optimism and a claim of "60,000" AC battery preorders, Enphase's AC battery and energy storage aspirations seem to be fizzling or are at least very delayed. The Enphase CEO did some backpedaling: "We are facing a more competitive pricing environment and are actively working to reduce our cost in 2017. In addition, we believe the total addressable market is developing slower than anticipated." He added, "I don't think we’re going to see those [preorders] materialize. I think the actual numbers are going to be substantially less."
The company's current margins cannot sustain it -- and the microinverter pioneer is running out of runway to make the necessary course correction. Enphase's future will become evident over the next few quarters.