Enphase’s third quarter was marked by continued weakness in the core U.S. residential solar market, as sales volumes fell sharply and results missed Wall Street expectations. Management attributed the underperformance to higher interest rates and the phase-out of the 25D tax credit, which limited solar adoption and pressured sell-through. CEO Badrinarayanan Kothandaraman described the market as “challenging,” noting that the company’s U.S. sell-through declined 35% year over year, in line with industry-wide permit data. He acknowledged that channel inventory remained elevated and that the company’s sequential revenue growth failed to meet original internal expectations.
Is now the time to buy ENPH? Find out in our full research report (it’s free for active Edge members).
Enphase (ENPH) Q3 2026 highlights:
- Revenue $293.3 million vs S&P analysts’ estimates of $306.1 million (28.5% year-on-year decline, 4.2% miss)
- Adjusted EPS $0.41 vs S&P analysts’ expectations of $0.50 (18.7% miss)
- Revenue guidance $240 million at the midpoint for Q4 2026, below analyst estimates of $298.6 million
- Operating margin 2.2%, down from 16.1% in the same quarter last year
- Sales volumes fell 19.8% year on year (2.2% in the same quarter last year)
- Market capitalization $3.31 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our top 5 analyst questions from Enphase’s Q3 earnings call
- Brian Lee (Goldman Sachs) asked how channel inventory reductions and new product shipments might affect seasonal revenue patterns in coming quarters. CEO Badrinarayanan Kothandaraman clarified that typical seasonality would be offset by pilots and the scaling of new growth vectors, including batteries and EV charging.
- Philip Shen (ROTH Capital Partners) pressed for clarity on baseline quarterly revenue trends and downside risk given ongoing residential softness. Kothandaraman acknowledged market uncertainty but stressed that growth drivers such as Propel and commercial storage are designed to reduce reliance on core residential solar.
- Colin Rusch (Oppenheimer) questioned the elasticity of demand following recent U.S. battery price cuts. Kothandaraman responded that it was too early to assess the impact, as the changes were implemented only a few months prior.
- Dylan Nassano (Wolfe Research) asked why European residential solar demand was not stronger given high energy prices. Kothandaraman attributed weakness to typical summer seasonality and the fading impact of energy security concerns, while emphasizing that new battery products and home energy management systems could reinvigorate demand.
- Mark Strouse (JPMorgan) inquired about operating expense discipline amid growth investments. Kothandaraman reiterated Enphase’s commitment to aligning spending with the revenue environment, assuring that resource allocation would remain disciplined even as new initiatives ramp up.
Catalysts in upcoming quarters
Looking ahead, the StockStory team will be watching (1) the pace of adoption for Enphase’s fifth-generation IQ Battery and the effectiveness of pricing strategies in driving market share, (2) the scaling of Propel and commercial battery pilots as early indicators of new product traction, and (3) progress in the AI data center SST program, especially regulatory compliance and pilot outcomes with hyperscaler partners. Execution on these fronts will determine how quickly Enphase’s diversification strategy translates into sustainable revenue growth.
Enphase currently trades at $24.68, down from $29.80 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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