Microinverter and battery storage supplier Enphase Energy reported revenue of $291.85 million in the second quarter (Q2) of 2026, down 20% year-over-year (YoY) from $363.15 million.

Revenue increased 3% sequentially from $282.9 million in the first quarter (Q1) of 2026.

The revenue exceeded analysts’ expectations by approximately $1.6 million.

The company’s Q2 revenue included $84.3 million in safe harbor revenue, compared to $34.5 million in the previous quarter. The revenue mix comprised 78% from the U.S. market and 22% from international markets.

Revenue from the U.S. market declined approximately 3% sequentially. Excluding safe harbor revenue, U.S. revenue declined primarily due to the company deliberately under-shipping into the distribution channel. U.S. sell-through decreased 7% sequentially and 34% YoY, although management noted that the first quarter included one-time orders that did not recur.

Enphase exited Q2 with normal channel inventory for batteries and slightly elevated inventory for microinverters. The company expects to under-ship by approximately $15 million in Q3 as it works to bring microinverter inventory to healthier levels

Europe was the strongest-performing region during the quarter. Revenue increased 35% sequentially and sell-through rose 30%, supported by higher electricity prices and accelerating battery adoption. Enphase said Europe is increasingly becoming a battery-led market as self-consumption, dynamic tariffs, and virtual power plants gain importance.

Battery activations in the Netherlands increased approximately 102% from Q1 as rising solar export penalties and the planned phaseout of net metering at the end of 2026 boosted demand for self-consumption. Activations increased approximately 34% in France, while Germany recorded approximately 35% growth in microinverter activations and 27% growth in battery activations.

Net income declined 31% YoY to $61.52 million from $89.87 million.

The company’s diluted earnings per share EPS fell to $0.46 from $0.69 but was in line with analysts’ expectations.

During the quarter, Enphase received approximately $41 million in tariff refunds from U.S. Customs and Border Protection, followed by another $11 million after the quarter ended. The total $52 million refund boosted GAAP results but was excluded from the company’s non-GAAP financial metrics because it related to tariffs paid in earlier periods.

Business Highlights

Enphase shipped approximately 1.59 million IQ Microinverters, equivalent to 725.2 MW (DC), and 113.8 MWh of IQ Batteries during the quarter. It also shipped approximately 1.58 million U.S.-made microinverters and battery inverters from its manufacturing facilities in Texas and South Carolina and booked the associated Section 45X production tax credits. It shipped 43 MWh of IQ Batteries from its Texas facility during the quarter.

The company said more than 25,000 installers worldwide are now certified to install IQ Batteries, up from more than 24,000 in the previous quarter.

Enphase executed year-to-date safe harbor agreements totaling approximately $1.08 billion, comprising $202.4 million under the 5% Investment Tax Credit Safe Harbor method and $878.6 million under the Physical Work Test method.

Enphase also plans to begin shipping its fifth-generation IQ Battery G5 in Q4 2026. The stackable battery uses 5 kWh modules and can scale to 30 kWh. The company said it is designed to provide 50% higher energy density than its fourth-generation battery and reduce the cost per kilowatt-hour by approximately 40%.

The company is developing the IQ Vault 80, an 80 kWh commercial battery with 40 kW of continuous power. Up to 25 cabinets can be combined to create a 2 MWh system, with initial shipments planned for the first quarter of 2027.

The company also accelerated development of its IQ Solid-State Transformer for artificial intelligence data centers. It said several customer engagements have progressed to request for information and request for proposal stages, representing a potential multi-gigawatt pipeline.

Q3 2026 Outlook

For the third quarter of 2026, Enphase expects revenue in the range of $290 million to $320 million, including approximately $75 million of safe harbor revenue and 130 MWh to 150 MWh of IQ Battery shipments.

The company expects global sell-through to increase by approximately 10% from Q2 levels, although distributors remain cautious amid broader macroeconomic uncertainty. It expects growth to be driven primarily by the U.S., while Europe is expected to remain broadly flat due to seasonal factors.

At the midpoint of its Q3 guidance, Enphase expects revenue of approximately $305 million. This includes core revenue excluding safe harbor shipments of approximately $230 million, compared with anticipated sell-through of nearly $245 million.

During the earnings call, an analyst highlighted weak capital flows, constrained tax equity, and uncertainty surrounding Foreign Entity of Concern guidance as challenges for the U.S. residential solar and third-party ownership markets.

In response, Badrinarayanan Kothandaraman, Chief Executive Officer,  acknowledged that visibility on Treasury guidance remained limited and that tax equity was tight, although he said the market was adjusting and conditions could improve.

He added that Enphase expects approximately $10 million in revenue from its U.S. small commercial business in Q3 and that the segment will continue to grow through the remainder of the year.