Enphase Tumbles on Revenue Drop Amid ‘Substantial’ Demand Hit

(Bloomberg) — Shares of solar equipment-maker Enphase Energy Inc. slumped after the company reported lower revenue amid a “substantial” drop in US and European demand that will likely last into next year.

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Third-quarter sales missed estimates and were down 13% from the year-ago period, the company said in a statement Thursday. US revenue, which fell 16% from the previous quarter, was pulled down by high interest rates and California’s recent changes to how solar homeowners are compensated for excess electricity they sell to the grid. European sales fared even worse, tumbling 34% from the previous period.

The company also forecast fourth-quarter revenue of $300 million to $350 million, well below the consensus estimate of $577 million. Shares fell 17% in after-market trading.

The news comes amid a massive selloff that’s hitting the solar sector. Shares have fallen in recent weeks on fears that high interest rates would hurt sales of residential and commercial solar projects alike. Enphase makes microinverters and batteries to pair with solar panels.

Enphase Chief Executive Officer Badri Kothandaraman said demand should start recovering in the second quarter of 2024. The European market is working through an oversupply of equipment that built up after Russia’s invasion of Ukraine and the resulting surge in natural gas prices triggered a rush of orders for solar arrays, he said during a call to discuss the earnings.

The US market outside California is already stabilizing, he said. California sales will recover in time, as utility rates rise and installers learn how to make the new compensation rules work for potential customers, Kothandaraman said.

“The second half of 2024 has great promise,” he said in a phone interview. “We’re not waiting for the market to come back. We’re diversifying into other countries. We’re introducing new products.”

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