third quarter of 2026
Filed Oct 27, 2026Enphase reported third-quarter revenue of $293.3 million, GAAP diluted EPS of $0.17, and non-GAAP diluted EPS of $0.41, while guiding fourth-quarter revenue to $225.0 million to $255.0 million.
Revenue was at the low end of guidance as global sell-through increased approximately 1% sequentially versus the company’s expectation of 10% growth. Gross margin, operating income, net income, and free cash flow declined sequentially, and fourth-quarter revenue, battery shipments, gross margin, and sell-through outlook indicate a weaker near-term demand and margin environment.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 revenueGAAP | $293.3M | – | – |
| Q3 2026 gross profitGAAP | $127.1M | – | – |
| Q3 2026 gross marginGAAP | 43.3% | – | – |
| Q3 2026 operating expensesGAAP | $120.7M | – | – |
| Q3 2026 research and development expenseGAAP | $45.20M | – | – |
| Q3 2026 sales and marketing expenseGAAP | $45.11M | – | – |
| Q3 2026 general and administrative expenseGAAP | $30.39M | – | – |
| Q3 2026 restructuring and asset impairmentGAAP | −$52K | – | – |
| Q3 2026 operating incomeGAAP | $6.47M | – | – |
| Q3 2026 interest incomeGAAP | $16.91M | – | – |
| Q3 2026 interest expenseGAAP | −$327K | – | – |
| Q3 2026 other expense, netGAAP | −$26.62M | – | – |
| Q3 2026 income before income taxesGAAP | −$3.57M | – | – |
| Q3 2026 income tax benefitGAAP | $26.96M | – | – |
| Q3 2026 net incomeGAAP | $23.39M | – | – |
| Q3 2026 basic EPSGAAP | $0.18 | – | – |
| Q3 2026 diluted EPSGAAP | $0.17 | – | – |
| Q3 2026 gross profitnon-GAAP | $132.0M | – | – |
| Q3 2026 gross marginnon-GAAP | 45.0% | – | – |
| Q3 2026 operating expensesnon-GAAP | $78.44M | – | – |
| Q3 2026 income from operationsnon-GAAP | $53.58M | – | – |
| Q3 2026 net incomenon-GAAP | $54M | – | – |
| Q3 2026 basic EPSnon-GAAP | $0.41 | – | – |
| Q3 2026 diluted EPSnon-GAAP | $0.41 | – | – |
| Q3 2026 net cash provided by operating activitiesGAAP | $90K | – | – |
| Q3 2026 purchases of property and equipmentGAAP | −$11.46M | – | – |
| Q3 2026 free cash flownon-GAAP | −$11.37M | – | – |
| Q3 2026 IQ Microinverter shipmentsother | approximately 1.42 million IQ Microinverters, or 655.2 megawatts DC | – | – |
| Q3 2026 IQ Battery shipmentsother | 129.9 MWh | – | – |
| Nine months ended September 30, 2026 net revenuesGAAP | $868.1M | – | – |
| Nine months ended September 30, 2026 gross profitGAAP | $402.5M | – | – |
| Nine months ended September 30, 2026 income from operationsGAAP | $28.34M | – | – |
| Nine months ended September 30, 2026 net incomeGAAP | $52.06M | – | – |
| Nine months ended September 30, 2026 diluted EPSGAAP | $0.39 | – | – |
| Nine months ended September 30, 2026 free cash flownon-GAAP | $97.53M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
fourth quarter of 2026 outlook
- Revenue$225.0 million to $255.0 million
- Gross marginGAAP gross margin of 38.0% to 41.0%; non-GAAP gross margin of 40.0% to 43.0%
- Operating expensesGAAP operating expenses of $119.0 million to $123.0 million; non-GAAP operating expenses of $76.0 million to $80.0 million
- NoteShipments of 100 to 120 MWh of IQ Batteries
- Noteapproximately $51.2 million of safe harbor revenue
- Notesell-through down 10%, compared with the third quarter of 2026
- Noteapproximately 2.0 percentage points of reciprocal tariff impact
- Note$43.0 million estimated for stock-based compensation expense and acquisition related amortization
Capital returns
- Payments of withholding taxes related to net share settlement of equity awards were $(2,711) (in thousands) in the three months ended September 30, 2026.
- No repurchases of common stock were reported in the three months ended September 30, 2026.
What drove it
- Third-quarter revenue included $85.0 million of safe harbor revenue, compared to $84.3 million in the second quarter.
- Revenue in the United States increased approximately 3%, a smaller than anticipated increase due to soft residential solar demand.
- Revenue in Europe decreased approximately 11%, due to summer seasonality and continued weakness in certain solar markets.
- Global sell-through increased approximately 1% sequentially in the third quarter of 2026, below the company’s expectation of 10% growth.
- U.S. sell-through increased 5% sequentially but declined 35% year-over-year.
- The non-GAAP gross-margin decrease was driven by product mix.
- Reciprocal tariffs reduced gross margin by approximately 1.3 percentage points, down from approximately 2.0 percentage points in the second quarter.
- IQ Battery shipments were 129.9 MWh, compared to 113.8 MWh in the second quarter.
Concerns
- Core U.S. residential solar demand faced headwinds from higher interest rates and the expiration of the Section 25D federal tax credit.
- European sell-through declined 12% sequentially, reflecting seasonality and softer demand, particularly in France.
- Third-quarter global sell-through was below the company’s expectation and contributed to revenue at the low end of the guidance range.
- Fourth-quarter outlook assumes sell-through will be down 10%, compared with the third quarter of 2026.
- Fourth-quarter GAAP gross-margin guidance includes approximately 2.0 percentage points of reciprocal tariff impact.
- GAAP and non-GAAP diluted EPS were reduced by $0.15 and $0.14, respectively, due to impairment in investments.
What to watch
- Validation of IQ SST operation at 34.5 kV and demonstration of a megawatt-scale system by the end of 2026.
- Customer pilots for IQ SST in 2027 and expected commercial shipments beginning in 2028.
- Conversion of the IQ SST customer and partner pipeline of over 50 into commercial opportunities.
- Fourth-quarter sell-through, safe harbor revenue of approximately $51.2 million, and IQ Battery shipments of 100 to 120 MWh.
- Demand trends in U.S. residential solar and European solar markets, particularly France.
- Adoption of the IQ Battery G5, Propel prepaid lease program, commercial solar products, EV chargers, and IQ SST.
Balance sheet and cash flow
- Cash and cash equivalents were $380,398 (in thousands) at September 30, 2026.
- Marketable securities were $551,448 (in thousands) at September 30, 2026.
- Cash, cash equivalents and marketable securities were $931.8 million at the end of the third quarter of 2026.
- Debt, non-current was $573,163 (in thousands) at September 30, 2026.
- Debt, current was — at September 30, 2026.
- Inventory was $243,707 (in thousands) at September 30, 2026.
- Accounts receivable, net was $249,939 (in thousands) at September 30, 2026.
- Net cash provided by operating activities was $90 (in thousands) in the third quarter of 2026.
- Capital expenditures were $11.5 million in the third quarter of 2026, compared to $14.4 million in the second quarter.
- Free cash flow was $(11,370) (in thousands) in the third quarter of 2026.
Analysis
Third-quarter revenue was $293.3 million, compared with $291.9 million in the second quarter and $410.4 million in the third quarter of 2025. Management said revenue finished at the low end of its guidance range because global sell-through increased approximately 1% sequentially, below its expectation of 10% growth. U.S. revenue increased approximately 3%, while European revenue decreased approximately 11% amid summer seasonality and continued weakness in certain solar markets. U.S. sell-through increased 5% sequentially but declined 35% year-over-year.
Profitability weakened materially from the prior quarter. GAAP gross margin was 43.3%, versus 60.0%, and non-GAAP gross margin was 45.0%, versus 46.8%. Management attributed the non-GAAP margin decrease to product mix. Reciprocal tariffs reduced gross margin by approximately 1.3 percentage points, compared with approximately 2.0 percentage points in the second quarter. GAAP operating income was $6.5 million and non-GAAP operating income was $53.6 million, compared with $51.5 million and $56.7 million, respectively, in the second quarter.
GAAP net income was $23.4 million and diluted EPS was $0.17, while non-GAAP net income was $54.0 million and non-GAAP diluted EPS was $0.41. The company stated that GAAP and non-GAAP diluted EPS were reduced by $0.15 and $0.14, respectively, due to impairment in investments. Non-GAAP operating expenses were $78.4 million, compared with $79.8 million in the second quarter, so the sequential decline in non-GAAP operating income followed the lower gross margin rather than higher non-GAAP operating expenses.
Liquidity remained substantial, with $931.8 million in cash, cash equivalents and marketable securities at quarter end, including $380.4 million of cash and cash equivalents and $551.4 million of marketable securities. Operating cash flow was $90 thousand, capital expenditures were $11.5 million, and non-GAAP free cash flow was negative $11.4 million. IQ Battery shipments rose to 129.9 MWh from 113.8 MWh in the second quarter, providing a positive volume data point despite the broader demand weakness.
Fourth-quarter guidance calls for revenue of $225.0 million to $255.0 million, 100 to 120 MWh of IQ Battery shipments, and sell-through down 10% versus the third quarter. GAAP gross-margin guidance is 38.0% to 41.0%, and non-GAAP gross-margin guidance is 40.0% to 43.0%, each including approximately 2.0 percentage points of reciprocal tariff impact. The company is advancing IQ SST development, targeting 34.5 kV validation and a megawatt-scale demonstration by the end of 2026, customer pilots in 2027, and commercial shipments beginning in 2028.
Not in the filing
stated, not guessed- Previous-release outlook was not provided; therefore, prior-guidance comparisons cannot be made.
- No reportable revenue segments were disclosed.
- No fourth-quarter guidance was provided for EPS, net income, operating income, operating cash flow, free cash flow, or tax rate.
- No named executive quotations were included in the provided filing text.
- No dividend declaration or payment was reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.