$ENPH · Enphase Energy, Inc.
Enphase Energy reported Q3 2026 revenue of $293.3M, essentially flat sequentially but down 28.5% YoY. GAAP gross margin plunged to 43.3% from 60.0% in Q2, as the prior quarter benefited from $43.3M in tariff refunds that did not repeat. Q4 guidance of $225M-$255M revenue and 40%-43% non-GAAP gross margin came in well below expectations, with sell-through projected down 10% sequentially.
- Q3 revenue of $293.3M was flat vs Q2 ($291.9M) and down 28.5% YoY from $410.4M.
- GAAP gross margin collapsed to 43.3% from 60.0% in Q2, driven by product mix and the absence of large tariff refunds that inflated Q2.
- Non-GAAP diluted EPS of $0.41 included a $0.14 impairment hit from investments; GAAP diluted EPS was $0.17.
- Q4 revenue guidance of $225M-$255M implies a sequential decline of 13%-23% at the midpoint, well below Q3's $293.3M.
- U.S. sell-through rose only 5% sequentially and fell 35% YoY; European sell-through dropped 12% sequentially.
Extended-hours trading shows ENPH at $26.67, down 10.39% from the regular-session close of $29.76. The Q4 guidance range of $225M-$255M is a sharp sequential drop from Q3's $293.3M, and the GAAP gross margin collapse from 60.0% to 43.3% QoQ signals the Q2 tariff-refund boost was a one-time event.
The Q4 guidance cut reveals the core residential solar business is deteriorating faster than expected, with the Q2 tariff-refund sugar high now fully behind them.
Enphase's results reflect the broader U.S. residential solar downturn — U.S. sell-through down 35% YoY aligns with third-party reports of market contraction. The pivot to AI data center infrastructure (IQ SST) and commercial solar signals a strategic shift as core residential markets soften.
Reciprocal tariffs reduced gross margin by ~1.3pp in Q3 and are expected to hit ~2.0pp in Q4. U.S. residential solar faces headwinds from higher interest rates and the expiration of the Section 25D federal tax credit. European demand is weakening, particularly in France.