Home energy technology company Enphase (NASDAQ: ENPH) met Wall Street’s revenue expectations in Q1 CY2026, but sales fell by 20.6% year on year to $282.9 million. The company expects next quarter’s revenue to be around $295 million, close to analysts’ estimates. Its non-GAAP profit of $0.47 per share was 5.5% above analysts’ consensus estimates.
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Enphase (ENPH) Q1 CY2026 Highlights:
- Revenue: $282.9 million vs analyst estimates of $283.6 million (20.6% year-on-year decline, in line)
- Adjusted EPS: $0.47 vs analyst estimates of $0.45 (5.5% beat)
- Adjusted EBITDA: $40.16 million vs analyst estimates of $65.23 million (14.2% margin, 38.4% miss)
- Revenue Guidance for Q2 CY2026 is $295 million at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: -10.5%, down from 9% in the same quarter last year
- Free Cash Flow Margin: 29.3%, up from 9.5% in the same quarter last year
- Sales Volumes were down 9.2% year on year
- Market Capitalization: $4.64 billion
Company Overview
The first company to successfully commercialize the solar micro-inverter, Enphase (NASDAQ: ENPH) manufactures software-driven home energy products.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Enphase grew its sales at a solid 10% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Enphase’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 12.5% over the last two years. 
This quarter, Enphase reported a rather uninspiring 20.6% year-on-year revenue decline to $282.9 million of revenue, in line with Wall Street’s estimates. Company management is currently guiding for a 18.8% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 11% over the next 12 months. While this projection is better than its two-year trend, it’s tough to feel optimistic about a company facing demand difficulties.
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Operating Margin
Enphase has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 14.3%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, Enphase’s operating margin decreased by 7.4 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.
This quarter, Enphase generated an operating margin profit margin of negative 10.5%, down 19.4 percentage points year on year. Since Enphase’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Enphase’s EPS grew at 12.5% compounded annual growth rate over the last five years, higher than its 10% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.
We can take a deeper look into Enphase’s earnings quality to better understand the drivers of its performance. A five-year view shows that Enphase has repurchased its stock, shrinking its share count by 10.3%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings. 
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Enphase, its two-year annual EPS declines of 9.5% mark a reversal from its (seemingly) healthy five-year trend. We hope Enphase can return to earnings growth in the future.
In Q1, Enphase reported adjusted EPS of $0.47, down from $0.68 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 5.5%. Over the next 12 months, Wall Street expects Enphase’s full-year EPS of $2.77 to shrink by 18.6%.
Key Takeaways from Enphase’s Q1 Results
We were impressed by how significantly Enphase blew past analysts’ adjusted operating income expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its EBITDA missed and its revenue was in line with Wall Street’s estimates. Zooming out, we think this was a mixed quarter. Investors were likely hoping for more, and shares traded down 3.6% to $33.56 immediately following the results.
So should you invest in Enphase right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
