Q4 2021 Enphase Energy Inc Earnings Call

Speaker 1: Thank you for standing by and welcome to the NFS Energy Fourth Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.

Thank you for standing by and welcome to the Enphase Energy fourth quarter 2021 financial results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. If.

Speaker 1: If you'd like to ask a question at that time, please press star then one on your touch tone telephone. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Karen Saget. Please go ahead.

If you'd like to ask a question at that time. Please press Star then one on your touch tone telephone as a reminder, today's program is being recorded I would now like to introduce your host for today's program Gary <unk>. Please go ahead.

Speaker 2: Good afternoon and thank you for joining us on today's conference call to discuss Enphase Energy's fourth quarter 2021 results. On today's call are Badri Kothandaraman, Enphase's President and Chief Executive Officer, Eric Branderes, Chief Financial Officer, Mandy Yang, Chief Accounting Officer and Corporate Treasurer, and Raghu Balur, Chief Products Officer. After the market closed today, Enphase issued a press release announcing the results for its fourth quarter and the December 31st, 2021.

Good afternoon, and thank you for joining us on today's conference call to discuss Enphase Energy's fourth quarter 2021 result on todays call are Patrick Thunder Aman <unk>.

As President and Chief Executive Officer, Eric <unk>, Chief Financial Officer, Mandy Yang Chief Accounting Officer, and corporate Treasurer and might go below our chief products Officer.

After the market closed today Enphase issued a press release announcing the results for its fourth quarter ended December 31 2021.

Speaker 2: During this conference call, Enphase Management will make forward-looking statements, including but not limited to statements related to Enphase Energy's expected future financial performance, the capability of our technology and products, including features, performance in our operations, including manufacturing and customer service, the anticipated growth in our sales and in the markets in which we operate and target, the benefits to homeowners and installers, and regulatory issues.

During this conference call Enphase management will make forward looking statements, including but not limited to statements related to Enphase Energy's expected future financial performance the capability of our technology and products, including features performance in our operations, including manufacturing and customer service the anticipated growth in our sales and in the markets in which we operate and target the <unk>.

<unk> to homeowners and installers and regulatory issues. These forward looking statements involve significant risks and uncertainties and Enphase Energy's actual results and timing of events could differ materially from these expectations for a more complete discussion of the risks and uncertainties. Please see the company's annual report on Form 10-K for the year ended December 31.

Speaker 2: These forward-looking statements involve significant risks and uncertainties, and NCSE's energy's actual results, and the timing of events could differ materially from these expectations.

Speaker 2: For a more complete discussion of the risks and uncertainties, please see the company's annual report on Form 10-K for the year ended December 31, 2020, which is on file with the FCC, an annual report on Form 10-K for the year ended December 31, 2021, which will be filed with the FCC in the first quarter of 2022.

2020, which is on file with the SEC and annual report on Form 10-K for the year ended December 31, 2021, which will be filed with the SEC in the first quarter of 2022.

Speaker 2: and Safe Energy cautions you not to place any undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in expectations.

Enphase energy cautions you not to place any undue reliance on forward looking statements and undertakes no duty or obligation to update any forward looking statements as a result of new information future events or changes in expectation.

Speaker 2: Also, please note that financial measures used on this call are expressed on a non-GAAT basis unless otherwise noted and have been adjusted to exclude certain charges. The company has provided a reconciliation of these non-GAAT financial measures to GAAT financial measures in its earnings release posted today, which can also be found in the investor relations section of its website. Now I'd like to introduce Badri Kathandaraman, President and Chief Executive Officer of Enphase Energy. Badri?

Also please note that financial measures used on this call are expressed on a non-GAAP basis, unless otherwise noted and have been adjusted to exclude certain charges. The company has provided a reconciliation of these non-GAAP financial measures to GAAP financial measures in its earnings release posted today, which can also be found in the Investor Relations section of its website now I'd like to introduce <unk>.

Patrick with under Armours, <unk>, President and Chief Executive Officer of Enphase Energy Badri.

Speaker 3: Good afternoon and thanks for joining us today to discuss our fourth quarter 2021 financial disaster.

Good afternoon, and thanks for joining us today to discuss our fourth quarter 2021 financial results.

Speaker 3: We had a good quarter. We reported revenue of $412.7 million, shipped approximately 3 million micro inverters, and 100.2 megawatt hours.

We had a good quarter.

We reported revenue of $412 7 million.

Shipped approximately 3 million micro inverters.

102 megawatt hours of IQ batteries.

Speaker 3: achieved non-GAAP gross margin of 40.2% and generated free cash flow of $84.1 million.

Achieved non-GAAP gross margin of 42%.

<unk> generated free cash flow of $84 1 million.

We started production shipments of our IQ eight micro inverters.

Customers in North America during Q4, and we have been very pleased with customer feedback so far.

Speaker 3: We exited the fourth quarter at approximately 40, 17, 24. This means 40% growth margin, 17% operating expenses, and 24% operating income, all as a percentage of revenue on a non-gap basis. As a reminder, our baseline financial model is 35, 15, 20. We will go into detail about our financials later in the call. Let's now discuss how we are-

We exited the fourth quarter at approximately $40 <unk> 24.

Means 40% gross margin, 17% operating expenses and 24% operating income all as a percentage of revenue on a non-GAAP basis.

As a reminder, our baseline financial model is $35 15, 20, we won't go into detail about our financials later in the call.

Let's now discuss how we are servicing customers.

Q4, NPS worldwide was 69% compared to 67% in Q3.

Our North American MBS was 73%.

The 71% in Q3.

Our average call wait time increased to eight nine minutes in Q4 compared to $5 five minutes in Q3, as we on boarded new installers and feel that more calls on our batteries. The ramp of our batteries has significantly increased call volumes as new installers learn how to commission the system and homeowners.

And about the systems features we are not happy about the higher rate time, and we are working on it to reduce it under a minute through staffing and training.

Speaker 3: During Q4, we also increased the number of field service technicians in the US and Europe to provide onsite help to our installers, particularly on batteries.

During Q4, we also increased the number of field service technicians in the U S and Europe to provide onsite helped all of installers, particularly on bedrooms.

Let's talk about manufacturing.

Speaker 3: Our operations team did a great job flexing manufacturing as 2021 played out. As we have discussed in the past earnings call.

Our operations team did a great job flexing manufacturing as 2021 played out.

As we have discussed in the past earnings call.

Speaker 3: The global supply chain situation, the global supply chain is still under a little bit of stress, but our situation has been stable, primarily due to diligent supplier management and qualification of alternates suppliers during the past year. Our supply of AC fed drivers is at a very healthy level and we have five sources for AC fed drivers.

The global supply chain situation.

Supply chain is still learn that a little bit of stress, but our situation has been stable primarily due to diligent supplier management and qualification of alternate suppliers during the past year, our supply of AUC drivers is at a very healthy level and we have five sources for.

<unk> AC fed drivers for Asics, using our micro Inverters are soft play was quite healthy in Q4, and we continue to manage it closely as we ramp IQ eight and we have two foundry sources for our ASIC.

Speaker 3: For ASICs used in our micro inverters, our supply was quite healthy in Q4. And we continue to manage it closely as we ramp IQ8. And we have two foundry sources for our ASICs.

Speaker 3: With the growing demand for our microinvotors, we remain vigilant regarding the global supply chain and logic.

With the growing demand for micro Inverters, we remain vigilant regarding the global supply chain and logistics.

Speaker 3: Given our strong demand, we added a fully automated line in Q4, bringing quarterly capacity to 2.25 million microinverters in Mexico.

Given our strong demand we added a fully automated line in Q4, bringing quarterly capacity to two to 5 million micro Inverters in Mexico we.

Speaker 3: We had already added a second fully automated line earlier in 2021 at our contract manufacturer, Sal Combin India, bringing that quarterly capacity to about 1.5 million micro-inwards.

We had already added a second fully automated line earlier in 2021 at our contract manufacturer and a solid comp in India, bringing that quarterly capacity to about one 5 million micro and workers.

Speaker 3: Along with our existing capacity in China, we can now do a little more than 5 million microinverters per quarter in total for all microinverters worldwide.

Along with our existing capacity in China, we can now do a little more than 5 million micro inverters for the quarter in total for all micro Inverters worldwide.

Speaker 3: We're also planning to add a contract manufacturing facility for microinverters in Europe by the end of this year. We see rapid growth in the region and would like to service customers better.

We are also planning to add a contract manufacturing facility for micro Inverters in Europe by the end of this year.

The rapid growth in the region and we'd like to service customers better.

Let's now talk about batteries.

Speaker 3: Our two sources for battery cell packs have increased their capacity to 180 MW per quarter from 120. Our existing cell packs suppliers are capable of adding even more capacity if needed. And we are continuing discussions with additional cell packs suppliers as well.

Our two sources.

Battery cell packs of increase that capacity to 180 megawatt hours a quarter from $1 20, our existing self back suppliers are capable of adding even more capacity if needed and we are continuing discussions with additional itself back suppliers as well.

Speaker 3: As always, there are a few components that we are managing to ensure we don't have a supply disrupt.

As always a few components that we're managing to ensure we don't have a supply disruption.

Speaker 3: There is never a dull day for our operations team in these times.

That is nevertheless, double data for our operations team in these times.

Speaker 3: Our lead times for batteries are still long today at approximately 14 to 16 weeks, primarily due to logistics challenges, which are global.

Our lead times for batteries are still long today at approximately 14% to 16 weeks, primarily due to logistics challenges which are global.

Speaker 3: The lead times would come down once global shipping and port congestion conditions improve. Let's.

Lead times should come down one global shipping and port congestion conditions improve.

Move on to the regions or the U S and international revenue mix for Q4 was 82 and 18% respectively.

Speaker 3: Our US and international revenue mix for Q4 was 82 and 18% respect.

Speaker 3: For 2021, we achieve record revenue across all regions with more than 78% growth year-on-year.

For 2021, we achieved record revenue across all regions with more than 78% growth year on year.

Speaker 3: Our US and international revenue mix for the full year was 80% and 20% respect.

Our U S and international revenue mix for the full year was 80% and 20% respectively.

Speaker 3: In the US, the revenue increased 74% year-on-year. We reported record revenue and sell-through from our distribution partners to installers for both microinverters and batteries in Q4. Our microinverter channel inventory was at a healthy level at the end of Q4, but our storage channel inventory remained tight due to strong demand and logistics challenges.

In the U S revenue increased 74% year on year.

We reported record revenue and sell through from our distribution partners to installers.

Micro inverters and batteries in Q4.

Our micro inverter to channel inventory.

Healthy level at the end of Q4, but our total channel inventory remained tight due to strong demand and logistics challenges.

Speaker 3: We expect microinverter channel inventory to remain healthy in Q1 and storage channel inventory to improve.

We expect micro inverter channel inventory to remain healthy in Q1 and storage channel inventory to improve.

Speaker 3: In Europe , Revenue more than double-lear on year. I am very pleased with our team's performance and excited about the growth in 2020.

In Europe revenue more than doubled year on year.

I am very pleased with our team's performance and excited about the growth in 2022.

Speaker 3: During 2021, we expanded into HLE with solar microinverters and introduced batteries in Germany and Belgium.

During 2020 , one we expanded into Italy, with solar micro Inverters and introduced batteries in Germany and Belgium.

Speaker 3: We do plan to introduce batteries in other countries in Europe steadily throughout 2022.

We do plan to introduce batteries and other countries in Europe steadily throughout 2022.

Speaker 3: In Asia Pacific region, revenue increased 80% year-on-year. Adding into 2022, we look to capitalize on the industries recovery from COVID restrictions, as well as recent regulatory changes that are favorable to our software defined ACR.

In the Asia Pacific region revenue increased 80% year on year.

Heading into 2020, do we look to capitalize on the industry's recovery from Covid restrictions as well as recent regulatory changes that are favorable to our software defined AC architecture.

Speaker 3: We plan to introduce batteries in Australia in the second half of 2022.

We plan to introduce batteries in Australia in the second half of 2022.

Speaker 3: In Latin America, revenue increased 77% year-on-year. We remain quite bullish about our solar plus storage business in Puerto Rico. And I expect steady growth there in the next few quarter.

In Latin America revenue increased 77% year on year, we remain quite bullish about our solar plus storage business in Puerto Rico, and I expect steady growth there in the next few quarters.

Speaker 3: We're also very pleased with the progress we are making in Brazil as we started ramping IQ 7 plus microinverters to installers in Q4.

We're also very pleased with the progress we are making in Brazil, as we started ramping IQ seven plus micro inverters installers in Q4.

Speaker 3: Now that we covered all the regions, let's discuss the overall bookings for Q1.

Now that we covered all of the regions lets discuss the overall bookings for Q1.

Speaker 3: Our overall customer demand for Q1 is quite robust for both microinverters and batteries and exceeds the higher end of our guidance range.

Our overall customer demand for Q1 is quite robust for both micro inverters and batteries and exceed the higher end of our guidance range.

Speaker 3: The component availability is certainly better than what we experienced last year. We are primarily left with logistic challenges, which are global in general, and not very specific to end phase. We are quite optimistic that our supply will cash up to demand during the year.

Component availability is certainly better than what we experienced.

Last year, we have.

Primarily left with logistics challenges, which are global in general and.

Not very specific to earn fees.

We're quite we're quite optimistic there.

Supply will catch up to demand during the year.

Speaker 3: Let's talk about our storage systems. We shipped 100.2 megawatt hours of IQ batteries, which was a significant 53% increase from Q3.

Let's talk about our storage systems.

102 megawatt hours of ICU batteries, which was a significant 53% increase from Q3.

Speaker 3: As I mentioned, our lead times are a little long at around 14 to 16 weeks, mainly due to logistic challenges.

As I mentioned that lead times are a little longer to around 14 to 16 weeks, mainly due to logistics challenges.

Speaker 3: We expect a ship between 110 and 120 megawatt hours of batteries in Q1. This represents a 15% growth from Q4.

We expect to ship between 110 120 megawatt hours of batteries in Q1. This represents a 15% growth from Q4.

Speaker 3: Due to the increase in logistics, cost which are significant, and increase in component cost driven by inflation, we are implementing a modest price increase on our batteries beginning March of 2022.

Due to the increase in logistics costs, which are significant and increase in component costs driven by inflation. We are implementing a modest price increase or not batteries beginning March of 2022.

Let's talk about installer training them better.

Speaker 3: By the end of Q4, we trained approximately 4,845 installer personnel. They're presenting approximately 2,000 plus, 2,000 plus installation company.

By the end of Q4, we trained approximately 4845 installer personnel.

Something approximately 2000, plus 2000 plus installation companies.

Speaker 3: Our hands-on storage training continue through the use of mobile vans and regional training centers in the fourth quarter.

Our hands on storage training continue through the use of mobile vans and regional training centers in the fourth quarter.

Speaker 3: We are continuing to work on commissioning times for installers while adding features such as load control and generator compatibility to our battery.

We are continuing to work on commissioning times for installers, while adding features such as load control and generate a compatibility batteries.

Speaker 3: We expect to introduce batteries in North America and Australia with a modularity of 5 kilowatt-hour and double the continuous and peak power in the second half of 2020.

We expect to introduce batteries in North America, and Australia with the modularity of five kilowatt hour and double the continuous and peak out in the second half of 2022.

Speaker 3: We believe this will not only enhance the customer experience significantly, it will also bring down the cost.

We believe this will not only enhance the customer experience significantly it will also bring down the cost.

Let's talk about new products.

Speaker 3: We started production shipments of IQ 8 microinverters for customers in North America and Q4. Lave Q4.

We started production shipments of IQ eight micro inverters for customers in North America in Q4 last year.

Speaker 3: The IQV fundamentally changes the paradigm for solar technology, which otherwise requires a grid connection to operate. IQV can form a microgrid during a power outage, using only sunlight, providing backup power, even without a battery. For homeowners who want a battery, there are no sizing restrictions and pairing an N-phase battery with an IQV solar system.

The IQ eight fundamentally changes the paradigm for solar technology, which otherwise required grid connection to opening.

<unk> can farm a micro grid during a power outage using only sunlight, providing backup power even without a battery for homeowners, who want a battery that have no sizing restrictions on adding an enphase battery with an IQ eight solar system.

Speaker 3: We also expect to introduce IQ 8 microinverters internationally in the second half of 2022.

We also expect to introduce IQ eight micro inverters internationally in the second half of 2022.

Speaker 3: Let's now talk about the IQ-AID full system for small commercial solar application.

Let's now talk about the IQ eight the full system for small commercial solar application.

Speaker 3: We have achieved compliance on the 640 WADA-AC microinverter for North America, and we are now focused on getting the full system and installer platform ready. We expect pilot shipments of the full system to select installers in this quarter, Q1, with volume shipments beginning in Q2.

We have achieved compliance on the 640 Watt AC micro inverter for North America, and we are now focused on getting the full system and install the platform ready.

We expect pilot shipments of the full system to select installers in this quarter Q1 with volume shipments beginning in Q2.

Let's go to Cripple Creek and acquisition, we completed in Q4 slipped.

Speaker 3: Let's go to Clipper Creek and acquisition we completed in Q4. Clipper Creek offers EV charging solutions for residential and commercial customers in the US.

<unk> Creek offers EV charging solutions for residential and commercial customers in the U S.

Speaker 3: There have been a pioneer in the EV charging market since 2006, and I've sold more than 110,000 level two charging stations, AC charging stations since inception.

They have been a pioneer in the EV charging market since 2006 and absorbed more than 110000 level two charging stations AC charging stations since inception the.

Speaker 3: The business is very healthy and the gross margins are in line within

The business is very healthy and the gross margins are in line with Enphase.

Speaker 3: a clipper creek brand as a reputation for quality, high quality and great service, which we like a lot.

The <unk> brand has a reputation for quality high quality and great service, which we like a lot.

Let me outline our plans for Chipotle.

Speaker 3: We plan to transfer manufacturing to our contract manufacturing facility in Mexico by the end of this year so that we can rapidly scale the business and support demand.

We plan to transfer manufacturing to a contract manufacturing facility in Mexico by the end of this year. So that we can rapidly scale the business and support demand.

Speaker 3: We're also looking forward to introducing the products imminently to distribution and installation partners in the US.

We're also looking forward to introducing the products imminently to distribution and installation partners in the U S.

Speaker 3: In addition, we plan to introduce connectivity in every charger will be shipping to enable smart EV charging with the NFays app. This will enable charging on a schedule, character optimization, and charging with green electrons from an NFays solar plus storage home energy system.

In addition, we plan to introduce connectivity in every challenge and will be shipping to enable smart EV charging with the enphase that this will enable charging on a schedule that if optimization and charging with green electrons from an enphase solar plus storage home energy system for.

Speaker 3: For the long term, we plan to work on bidirectional charging and grid service integration for vehicle to home and vehicle to grid applications.

For the long term, we plan to work on bidirectional charging and bridge services integration for vehicles to home and vehicle to grid applications.

Let me go to grid services.

Speaker 3: In December , we announced our participation in Arizona Public Service, APS, the residential battery grid services program. The program offers homeowners to install and face batteries. In APS is territory that chance to participate and earn money through one time up front incentives. We believe this new program from APS will help accelerate the adoption of N-Face systems in Arizona.

In December we announced our participation with Arizona public service Aps residential battery grid services programs.

The program offers homeowners, who install enphase enphase batteries and Aps's territory, the chance to participate and earn money through onetime upfront incentives. We believe this new program from Aps will help accelerate the adoption of Enphase systems in Arizona.

Speaker 3: We have previously discussed our participation in the Connected Solutions program and Hawaiian Electric Battery Bonus Grid Services programs. As a reminder, Connected Solutions is an incentive program implemented by three utilities in Connecticat, Massachusetts and Rhode Island to reduce electrical demand during high use periods.

We have previously discussed our participation in the connected solutions program in Hawaiian Electric battery bonus Blake services programs. As a reminder, connected solutions is an incentive program implemented by three utilities in Connecticut, Massachusetts, and Rhode Island to reduce electrical demand during high use periods.

Speaker 3: Hawaiian Electric Battery Bonus Gritzer Vs Program offers incentive for homeowners on the island of Wahoo who install a new home battery.

The Hawaiian electric battery bonus Rich services program offers incentive for homeowners on the island of Oahu, who install a new home battery.

Speaker 3: We also have about a dozen new grid services engagement in the pipeline, and we look forward to working with more utilities and aggregators in the months ahead. Let's talk about the

We also have about a dozen new grid services engagements in the pipeline and we look forward to working with multi utilities and aggregators in the months ahead.

Let's talk about the installer of digital platform.

Speaker 3: We are working to release solar grass pro later this quarter to improve the installer experience with an all-in-one solar and storage design and proposal tool that incorporates shading analysis, the ability to detect obstructions on the roof and 3D modeling of homes are driven by AI.

We are working to release solar graph growth later this quarter.

<unk> experience with an all in one solar and storage design and proposal tool that incorporates shading analysis.

Ability to.

To detect abstractions on the roof and three D modeling of homes are driven by AI.

Speaker 3: The product is currently being piloted by key installers.

The product is currently being piloted by key installers.

Speaker 3: Yeah, some of our top installers and will be released later this quarter.

Yes.

<unk> and will be released later this quarter.

Speaker 3: The former Solar Business BIN Engineering, now MFACE NIDA, provides proposal and permitting service.

The fundamental solar business <unk> engineering, now and faith neither.

<unk> proposal and permitting services.

Speaker 3: There we have added significant resources to accelerate automation and we expect to offer enhanced permitting services in the second half of the...

We have added significant resources to accelerate automation and we expect to offer enhanced permitting services in the second half of the year.

Speaker 3: As part of our efforts to further strengthen the installer digital platform, we acquired 365 pronto into four. The company offers the predictive software platform dedicated to simplifying maintenance by matching clean tech asset owners to a local and on-demand workforce of service providers.

As part of our efforts to further strengthen the installer digital platform. We acquired 365 Pronto in Q4. The company offers the predictive software platform dedicated to simplifying maintenance by matching clean tech asset owners to our local and on demand works.

Fourth of service providers.

Speaker 3: software platform will provide our installers the ability to service their own ONM content.

Our software platform.

Provide our installers the ability to service their own O&M contract.

Speaker 3: Let me now give you an update on our N-Face Installer Network, REN. We have now onboarded approximately 1,130 installers to our REN Worldwide through a highly selective process focused on installation quality and an exceptional home owner experience.

Let me now give you an update on our Enphase installer network.

We have now on boarded approximately 1130 installers to our EAN worldwide through a highly selective process focused on installation quality.

And an exceptional homeowner experience.

Next.

Speaker 3: I would like to comment on the California NEMS 3 proposed decision or PD, which was announced originally in December .

I would like to comment on the California, Mems III proposed decision or PD, which was announced originally in December .

Speaker 3: In our opinion, the PD in its current form unfairly penalizes solar-only systems by imposing fixed charges, significantly reducing export compensation.

In our opinion the PD in its current form unfairly penalizes solar only system by imposing fixed charges significantly reducing export compensation.

Speaker 3: and retroactively changing the length of the original NEM contract.

And retroactively changing the length of the original NEM contract.

Speaker 3: The PD was meant to encourage the transition from solar only to solar plus storage. While we believe this transition is a correct long-term goal to meet California's energy targets, storage is not yet fully mature for 100 percent attached in terms of cost, in terms of supply, in terms of permitting, warranty and training.

<unk> was meant to encourage the transition from solar only solar plus storage.

While we believe this transition is the correct long term goal to meet California's energy target storage is not yet fully mature for 100% attach in terms of cost in terms of supply dumps of permitting warranty and training we would.

Speaker 3: We would like to see a modified PD where the fixed charges are removed, the original length of the existing NEM contracts are restored, and a multi-year glide path is established to gradually reduce the export compensation.

Liked to see a modified ped.

Fixed charges are removed the original length of the existing contracts or at a store and a multi year glide path is established to gradually reduce the export compensation.

Speaker 3: We are working diligently with various stakeholders to try and influence a better outcome in order to eliminate any market disruptions and create a win-win for all rich payers and utilities.

We are working diligently with various stakeholders to try and influence a better outcome in order to eliminate any market disruptions and create a win win for all rate payers and utilities.

Speaker 3: In summary, we are pleased with our overall performance. As a reminder, our strategy is to build best in-class home energy systems and deliver them to home owners through our installation and distribution partners, enabled by an installer digital platform.

In summary, we are pleased with our overall performance as a reminder, our strategy is to build best in class home energy systems.

And delivered them to homeowners through our installation and distribution partners enabled by an installer digital platform.

Speaker 3: With our recent acquisitions, we are now able to offer more complete home energy systems to our partners comprising of solar, batteries, grid services, load control, EV chargers, and even compatibility with most third party generators.

With our recent acquisitions, we are now able to offer more complete home energy systems to our partners comprising of solar batteries direct services load control EV Chargers and even compatibility with most third party generators.

Speaker 3: We can also now offer design and proposal software, permitting services, installation and commissioning software, fleet management and monitoring software, and finally, O&M services for our installers through the digital platform. I would like to thank our employees for their hard work towards your strategy and continue dedication to advancing the sustainable future for all.

You can also now offer design and proposal software.

Services installation and commissioning software fleet management and monitoring software and finally O&M services for our installers through the digital platform I would like to thank our employees for their hard work towards <unk>.

Strategy and continued dedication to advancing a sustainable future for all.

Speaker 3: Before I turn the call over to discuss our financials, I want to inform you that Eric is retiring from NFAs. His last day at NFAs will be February .

Before I turn the call over to discuss our financials I want to inform you that Eric is retiring from Memphis. His last day at Enphase will be February 14th he has been a great partner to me over the last three and a half years and his financial leadership helped drive a sustained profitability and shareholder value.

Speaker 3: He has been a great partner to me over the last three and a half years.

Speaker 3: And the financial leadership self-drive are sustained profitability and shareholder value.

Speaker 3: We would like to thank him for the service and wish him well as he takes time to spend with his family. I'm pleased to announce that Mandy Yang, our chief accounting officer and corporate treasurer, has accepted the role of CFO , effective February 15th. With Mandy as our CFO , we will have a seamless transition as we continue to deliver growth and operational excellence.

We would like to thank him for his service and wish him well as he takes time to spend with his family I am pleased to announce that mainly Yang our chief accounting officer, and corporate Treasurer has accepted the role of CFO effective February 15th with Mandy as our CFO , we will have a seamless transition.

We continue to deliver growth and operational excellence.

Speaker 3: Eric will be in an advisory capacity with an in-phase through June 30th to assist with this transition.

And again it will be in the yeah in an advisory capacity with within phase through June 30 to assist with this transition.

Speaker 3: With that, I will hand the call over to Eric for his review of our financial results.

With that.

I will hand, the call over to Eric for his review of our financial results.

Speaker 4: Thanks brother and good afternoon everyone. I would like to convey my deep gratitude for my experience at MFA.

Thanks, Bob and good afternoon, everyone I would like to convey my deep gratitude for my experience I Didnt face I have had the pleasure to work with not only a very talented executive team.

Speaker 4: have had the pleasure to work with not only a very talented executive.

Speaker 4: and also a remarkable group of professionals who have such a hard work and education to the company. I want to especially thank Badri for his partnership and leadership in driving M56.

Also a remarkable group of professionals, who have shown such a hard work and dedication to the company I want to especially thank Bob <unk> for his partnership and leadership in driving the success.

Speaker 4: I plan to remain a short holder and I wish the company continues.

She will remain a shareholder and I wish the company continued success.

Speaker 4: I will provide more details related to our fourth quarter of 2021 financial results and hand over the code over to Mandy to provide our business outlook for the first quarter of 2020.

I will provide more details related to our fourth quarter of 2021 financial results and hand over the call over to <unk> to provide our business outlook for the first quarter of 2022.

Speaker 4: We have provided a reconciliation of these non-gap Chukap financial measures in our earnings release both today, which can also be found in the IR section of our website.

We have provided a reconciliation of these non-GAAP to GAAP financial measures in our earnings release posted today, which can also be found in the IR section of our website.

Speaker 4: Dollar revenue for Q4 was $412.7 million represented in Inclisos 17% sequentially and quarterly records.

Total revenue for Q4 was $412 $7 million, representing an increase of 17% sequentially.

Orderly record.

Speaker 4: We shipped approximately 182 MW DC of microin better and 100.2 MW of IQ batteries in the quarter.

We shipped approximately 1082 megawatts DC of microphone burners on 102 megawatt hours of high coupon rate in the quarter.

Speaker 4: NONGAP cross margin for Q4 was 40.2% compared to 40.8% in Q3. NONGAP cross margin was impact-

non-GAAP gross margin for Q4 was 42% compared to 48% in Q3 non.

non-GAAP gross margin was impacted by product mix.

Speaker 4: Gap cross margin worth 39.6% for Q4.

GAAP gross margin was 39, 6% for Q4.

Speaker 4: Non-gap operating expenses were $68.2 million for Q4 compared to $57.3 million for Q3. The sequential increase was primarily due to increased investment in product launches, R&D and IT infrastructure.

non-GAAP operating expenses were $68 2 million for Q4 compared to $57 3 million for Q3. The sequential increase was primarily due to increased investment in product launches.

R&D and a team from chart for short term.

Speaker 4: In capitol marine expenses were 105.6 million dollars for Q4 compared to 13 million dollars for Q4.

GAAP operating expenses were $105 6 million for Q4 compared to one 3 million for Q3.

Speaker 4: In GAAPO Peruvian expenses for Q4, included $35 million of stock base compensation expenses and $2.7 million of acquisition related expenses and a mortization for acquired indangible assets.

GAAP operating expenses for Q4 included $35 million of our stock based compensation expenses and $2 $7 million of acquisition related expenses and amortization for acquired intangible assets.

Speaker 4: On a non-gap basis, in confirm operations for Q4 was 97.7 million dollars compared to 85.9 million dollars for Q3. On a gap basis, in confirm operations was 57.7 million dollars for Q4 compared to 37.4 million dollars for Q4.

On a non-GAAP basis income from operations for Q4 was $97 7 million.

Compared to $85 9 million for Q3 on a GAAP basis income from operations was $57 7 million for Q4 compared to $37 4 million for Q3.

Speaker 4: On a non-gap basis, net income for Q4 was $102.8 million compared to $84.2 million for Q.

On a non-GAAP basis net income for Q4 was $102 $8 million compared to $84 $2 million for Q3.

Speaker 4: This resulted in non-gap diluted earnings per share of 73 cents for Q4 compared to 60 cents per share for Q3.

This resulted in non-GAAP diluted earnings per share of 73 for Q4 compared to <unk> 60 per share for Q3.

Speaker 4: Gap net income for Q4 was $52.6 million compared to Gap net income of $21.8 million for Q3. Gap deluded earnings per share with $0.37 for Q4 compared to deluded earnings per share of $0.15 for Q4.

GAAP net income for Q4 was $52 6 million compared to GAAP net income of $21 8 million for Q3 GAAP diluted earnings per share were <unk> 37 for Q4 compared to diluted earnings per share of <unk> 15 transport Kinsey.

Speaker 4: We exceeded Q4 with a total cash equivalent and marketable security balance of approximately $1 billion compared to approximately $1.4 billion at the end of Q3. We've repurchased our common stock for a total amount of $300 million on the open market in December 2021.

We exited Q4 with total cash cash equivalents and marketable securities balance of approximately $1 billion.

Compared to approximately $1 4 billion at the end of Q3.

We repurchased our common stock for a total amount of $300 million in on the open market in December 2021.

Speaker 4: We previously announced $500 million share of the report. Together with the $200 million of share by back in May 2021, we will report approximately $3.2 million shares in 2021 for a total of $500 million with an average price of $155 per share.

Against our previously announced $500 million share repurchase authorisation together with a $200 million of share buyback in May 2021, we repurchased approximately $3 2 million shares in 2021 portfolio of $500 million with an average price of $155.

Berkshire.

Speaker 4: This represents approximately 2.4% of our outstanding shares. In Q4, we generated $97.2 million in cash flow from operations and $84.1 million in free cash flow. For the year 2021, we generated a record, $315.5 million of free cash flow.

This represents approximately two 4% of our outstanding shares in Q4, we generated $97 $2 million in cash flow from operations and $84 $1 million in free cash flow for the year 2021, we generated a record $315 $5 million of free cash flow.

Speaker 4: Capital expenditure was 13.2 million dollars for Q4 to expand both micro-inverter and storage manufacturing capacity, as well as cost related to new product development.

Capital expenditure was $13 2 million for Q4 to expand both micro and better than historical manufacturing capacity as well as costs related to new product development.

Speaker 4: I will now hand over the call to Mandy to discuss our Q1 out.

I will now hand over the call to monthly to discuss our Q1 outlook.

Speaker 4: There is no greater joy for me to see here, except in this role of the CFO of MFACE. I cannot think of anyone more capable or with higher integrity to take on the challenges of this function, as the company continues to grow both organically and incomplexly.

There is no greater joy for me to see her accepting this role as the CFO from phase I cannot think of any one more capable or with higher integrity to take on the challenges of dysfunction.

The company continues to grow both organically and in complexity Mondays are remarkable professional with the right combination of finance and accounting technical skills, coupled with a proven track record of building large global finance team.

Speaker 4: Mandi is a remarkable professional with the right combination of finance and accounting technical skills, coupled with a proven track record of building large global finance.

Speaker 4: And her leadership, she will take his dysfunction to an even higher level of effect.

Under her leadership she will take this function to an even higher level of excellence money has been chief accounting officer, and corporate tertiary reprising fees for the past three and a half years and has done an outstanding job, leading the controller ship finance operations internal audit and control Treasury and tax functions often face.

Speaker 4: Mandy has been chief accounting officer and corporate treasurer by the inface for the past three and a half years and has done an outstanding job leading the control leadership final operations in turn alerted and controlled treasurer and thanks for something.

Speaker 4: With this transition to her at the new CFO , we will not miss a bit, and I am very pleased she has accepted this new role. And this...

With this transition to a new CFO .

We will not Miss a beat and I am very pleased she has accepted this new role.

Randy.

Speaker 5: Thanks Eric. It's important for me to work with Eric at NCAS. Under his leadership, we have built an exceptional finance team and I look forward to building underfun.

Thanks, Eric.

For me to work with Eric.

Okay leadership, we have built an exceptional finance team and I look forward with building on that foundation.

Speaker 5: We today are revenue for the first quarter of 2022 to be within a range of $420-440 million. For each includes, should month of 110 to 120 megawatt hours of IQ better.

Revenue for the first quarter of tiny tiny tool to be within a range of 122 $440 million.

Did you include shipments of 100 to 120 megawatt hour battery.

Speaker 5: Take gas, gross margin to be within a range of 37 to 40%.

We expect GAAP gross margin to be within a range of 37% to 40%.

Speaker 5: and Namge gross margin to be within a range of 38 to 41%. Which is cool, start based compensation distances and acquisition related amatitis.

non-GAAP gross margin to be within a range of 38% to 41%, which excludes stock based compensation expenses.

Amortization.

Speaker 5: We expect our gap operating expenses to be within a range of 130.5 to 133.5 million dollars, including a total of approximately 63 million dollars estimated for start-based compensation expenses, and acquisition related expenses.

Our GAAP operating expenses to be within a range of 135 to $133 $5 million, including a total of.

$63 million and then full.

Stock based compensation expenses and <unk>.

Acquisition related expenses.

Thank you.

Speaker 5: It estimated that the best compensation expenses include approximately $12.3 million, a course for the UNO that are tied to certain performance targets to be paid in a company's staff for the acquisitions of Clipper Crypt and 365.

And that is that this compensation.

Approximately $12 $3 million across all the.

Tied to certain performance targets will be paying our company stock.

Physician, Cleveland Clinic, and 365, Tom Tom.

Speaker 5: They are non-get operating expenses to be within a range of 67.5 to 17.5 million dollars. With that, I will not open...

Okay.

And operating expenses.

In a range of $67 five.

$75 million with that I will now open the line for questions.

Speaker 1: Certainly ladies and gentlemen, you have a question at this time. Please press star then one. We'd like to ask you that you please limit yourself to one question and one follow-up you may get back in the queue as time allows. Our first question comes from the line of Philip Shen from Roth Capital Partners. Your question please.

Certainly ladies and gentlemen, if you have a question at this time. Please press Star then one we'd like to ask you that you. Please limit yourself to one question and one follow up you may get back into queue. As time allows our first question comes from the line of Philip Shen from Roth Capital Partners. Your question. Please.

Yes.

Speaker 6: Hi everyone, congrats on the strong quarter. Our checks suggest demand for the battery product.

Hi, everyone congrats on the strong quarter.

Our checks.

Just demand for the battery part product is very strong even in the face of the two recent price hikes.

Speaker 6: very strong even in the face of the two recent price hikes.

Speaker 6: When do you expect your battery volumes to possibly hit a hundred eighty megawatt hours? And when could I, I, a third supplier or the capacity within the existing two suppliers being?

When do you expect your battery volumes to possibly hit 180 megawatt hours and when could a third.

Third supplier or the capacity within the existing two suppliers be increased.

Speaker 3: Thank you Phil. We are very happy with our demand on battery. So I'll give you some color on how we have done in the last year. First of all, our battery is AC-cooper.

Yes, Thank you Phil.

We're very happy with our demand on batteries. So I'll give you some color on how we have done in the last year and our.

First of all it badly.

D C koppers.

It is modular.

Low voltage BZ operation.

Users lithium iron phosphate, which is extremely safe chemistry.

Speaker 3: uses lithium iron phosphate which is extremely safe chemistry. Air cooled.

<unk> no.

No need of any fans.

Speaker 3: And additionally, we offer, you know, 15-year warranty, you know, no single point of failure.

Additionally, we offered a 15 year warranty.

No single point of failure.

Speaker 3: Through the last year we have offered load control, we have offered power start.

Through the through the last year, we have offered load control.

We have offered power start.

Generator compatibility.

Speaker 3: And all of those are belts and whistles that we have continuously added.

And all of those are the bells and whistles that we have continuously added.

Speaker 3: on top of our batteries, you know, the basic functionality. In addition, you know, the most important thing I'm proud of, we have to...

On top of our batteries.

Basic functionality in addition.

The most important thing I'm proud of.

We have trained over 2000.

Installers.

Speaker 3: non-tailed installers. I've no secret that non-tailed installers is an easy and face.

Long tail of installers.

Secret that long tail of installers and that is in phases bread and butter.

Speaker 3: You've drained 2000 plus installers, installation companies that...

We have trained 2000, plus installers installation companies.

Speaker 3: And then out of that 2000, there is 1300 plus installers who are certified, which is...

And then out of that 2013.

<unk> hundred plus installers, who are certified.

Which is they have done an installation.

Speaker 3: They took the training, they did an installation and we certified.

They took the training they did an installation and re certified.

Speaker 3: Extremely difficult to do. One installer at a time.

Extremely difficult to do one install it at the time.

Speaker 3: the last year and we believe that's the reason why our business is very strong and diversified. At the same time.

In the last year, and we believe that the reason why our business is very strong and diversified at the same time in the last year almost on a weekly basis, we have done weekly round tables without installers.

Speaker 3: In the last year, almost on a weekly basis, we have done weekly round tables with our

Speaker 3: where in every meeting we have 10 plus installers around. And they're not afraid.

But every meeting we have 10 plus installers around.

And they are not afraid to talk about issues.

Speaker 3: And I'm not saying we are perfect. But what we promise installers is we take feedback, we work on it.

And I'm not saying we are perfect.

But what we promise installers is we take feedback.

We work on it we improve our product.

Speaker 3: and we make your product better and better and better. That's why you saw us growing 53% from Q3 to Q4. And those are.

And we make our product better and better and better.

That's why you saw us growing 53%.

From Q3 to Q4.

And those are nice numbers by the way.

Speaker 3: From a supply chain perspective, every quarter we are doing better on batteries, but it is no secret that

From a supply chain perspective every quarter, we are doing better.

On batteries, but it is no secret that.

The logistics challenges our global.

Speaker 3: And that's what is causing a 14 to 16 week lead time on batteries. When do I expect it to get better? I expect it to get better continuously throughout 2020.

And that's what.

As causing a 14 to 16 week lead time on batteries when do I expect it to get better than I expected to get better continuously throughout 2022.

Speaker 3: And it is global, nothing specific within me. Of course, we have pockets of shortages here and there, but our team has become excellent at navigating all of those.

And it is global nothing specific with NPS of course, we have.

Pockets of shortages here and there, but our team has become excellent at navigating all of those very well.

Speaker 3: So I expect continuous growth and batteries throughout the year. I'm not going to give you a number on when we will break the-

So I expect continuous growth in batteries throughout the year.

I'm not going to give you a number on when we will.

Break the 180 megawatt hour.

Speaker 3: And you know, if we break the 180 megabord our zone, our cell packs, you know, suppliers are willing to flex and they will take us to a little bit more.

And.

If we break the 180 megawatt hour so our self back and our suppliers are willing to flex and they will take us through a little bit more.

Speaker 3: So we are not worried about that too much. Right now we are focused on servicing customers properly, adding new installers and making sure we improve customer.

So we are not worried about that too much right. Now we are focused on servicing customers properly, adding new installers and making sure we improve customer experience.

Speaker 6: Great, thanks for that color, Roger. And in terms of my follow-up, was wondering if you might be able to share where the margins on the storage product is or are today. And with the price increases, does that correspond? No, with the 7%, I think, expected for March 1st increased.

Great. Thanks for that color about jewelry and in terms of my follow up.

I was wondering if you might be able to share.

Where the margins on the storage product is.

Our today and.

The price increases.

Does that correspond with the 7% I think expected for March 1st increase.

Speaker 6: Does that correspond directly to that margin and how do you expect that battery margin to trend?

Does that correspond directly to that margin and how do you expect that battery margin to trend through 'twenty two.

Speaker 3: We're not breaking out the battery gross margin. The overall company gross margin was 40.2% in Q4. And I'll talk. I'll give you guys some general color and gross margins.

We're not breaking out the battery gross margin the overall company gross margin.

It was 42% in Q4 and talk and give you guys. Some general color on gross margins.

In the last year.

The overall the overall industry almost all industries have seen.

Lot of component shortages and logistics.

Which is.

Speaker 3: From a component cost perspective, the cost of increased significantly

From a component cost perspective, the cost of increased significantly.

Speaker 3: And the same thing on logistics, a container before which was $3,000. It's now $18,000. Six sex increase. So...

And the same thing on logistics that container before which are $3000.

It's now $18000 <unk> increase so.

Speaker 3: So our costs have gone up. But what our team has done is remarkable, which is both are microinverters and better.

So our costs have gone up but what our team has done a remarkable which is both a micro inverters and batteries.

We are able to still take costs out.

Yeah, a couple of examples, which I mentioned in the analyst day.

Speaker 3: was the bulkhead, the bulkhead on our microinverter. That's the project we've been talking about for some time. It is a painful learning for us, but it's a very important project because it helps us to remove an adapter cable shipped with the microinverter.

It was the bulk of it the bulk head on a micro inverter that is a project we've been talking about for some time. It is a painful learning for us, but it is very important project because it helps us to remove when adapter cables shipped with the micro inverters.

Speaker 3: And if we shift, I mean, if we remove the adapter cables, the cost of the micro-inverter obviously goes down. So with initiatives like that, our cost has actually gone down, but...

And if we ship I mean, if we remove the lab to the cable the cost of the micro inverter, obviously goes down so we'd initiated is like that.

Cost has actually gone down but.

Speaker 3: because of the component charges, the suppliers have raised cost runners, which is understandable and due to inflation as well. So.

Because of the component shortages.

Suppliers have raised cost, which is understandable and youll inflation as well.

Speaker 3: in a similar on batteries. And batteries, the same dynamics with reference.

So.

Similar on batteries.

And batteries.

The same dynamics with with reference to suppliers what are we doing about it.

Speaker 3: You know, every day we work on the tactical stuff, you know, how can we optimize the how can we optimize the battery management circuit and then we are going to introduce

Every day, we work on the tactical stuff.

How can we optimize them closure, how can we how can we optimize.

The battery management Circuit, and then we are going to introduce.

Speaker 3: product in second half of 2022 where because we are going to increase the modularity a little bit from a 3.3 kilowatt hours to

Our product set.

Second half of 'twenty to 'twenty, two where because we are going to increase the modularity a little bit from a from a three three kilowatt hours to five.

Speaker 3: 5 kilowatt hours we gain economies have failed that so that's good to help us

Kilowatt hour as we gain economies of scale there so that's going to help us.

Speaker 3: improve the cost on batteries, you know, come the second half of 2022 structural.

Improve the cost on batteries.

Come the second half of 2020 to structurally.

Speaker 3: In addition on top of that, I showed you in the analyst day that early 2023

In addition on top of that I showed you in the analyst day that early 2023.

Speaker 3: We'll have a radically new structure, at least for power conversion and battery management, where we integrate both.

A radically new structure.

At least for power conversion and battery management, where we integrate both.

Speaker 3: Power conversion and battery management into a single board. Both hardware and software.

Power conversion and battery management into a single board.

Both hardware and software unified.

Speaker 3: And then there's only one board between the battery and AC line. You know, versus we have seven boards that we showed you in the analyst day. So we are...

And then there is only one board between the battery.

And AC line versus.

We have seven boats that we showed you in the at the analyst day. So we are.

Speaker 3: extremely excited by that product and that will help us to get even more clickdown on cars as customers expect, you know, the optimal pricing from us. So, you know, hopefully I gave you some color. So here, you know, you're quite confident of the gross margin trajectory and, you know, we're going to make a lot of progress soon.

Extremely excited by that product and that will help us to get even more click down on costs as customers expect.

The optimal pricing from us so.

<unk> gave you some color and so we are you know.

You are quite confident of the gross margin trajectory and.

We're going to make a lot of progress.

Great. Thanks, Badri I'll pass it on.

Speaker 1: Thank you. Our next question comes in the line of J.B.L. from City. Your question, please.

Thank you. Our next question comes from the line of JP low from Citi. Your question. Please.

Yeah.

Speaker 7: I want to guess. The question was on 14 margins. I know that costs are increased.

Hey, good morning, guys.

Question was on <unk> margins.

No.

Costs are increasing.

But the margins.

Speaker 7: We're down due to mix. Can you just walk through what the product index was and how it affected margins and for you? Well, like what I said, you know.

You said were down due to mix can you just walk through what the product mix was and how it affected margins in tortilla.

Well like what I said.

The product mix.

Speaker 3: You know, we are talking about a drop from 40.8% I think in Q3 to 40.2% first. It's kind of very small. We're talking about, we just broke it out saying that, you know, beyond storage, we basically exceeded the higher end of guidance. So, it's slightly depressed, but, you know, all the comments I just talked about on margin are true and the margins have been, you know, understandably because of inflation. And big.

We are talking about a drop from 48% I think in Q3 to vote at around 2%. So it's kind of very small we are talking about we just broke it out saying that.

Beyond storage, we basically exceeded the higher end of guidance, so a slightly depressed, but all the comments I just talked about on margin.

True and the margins have been.

Understandably because of inflation.

And because of increasing component costs.

Speaker 3: because we increase logistics which I point to now. There is always pressure on gross margins, but we are able to counter it. That's what we do. We have world class test boards on both microinverters and batteries. We are not starting to work on anything. We work on capacitors, we work on transformers, we work on semiconductors, we work on transistors, we work on parting.

And because of increased logistics, which I pointed out there is always pressure on gross margins, but we are able to counter that is what we do we have a world class cost task force on both micro Inverters and batteries, we are not starting to work on anything we work on capacitors. We work on Transformers, we work on semiconductors, we work on transistors work on par.

King.

Speaker 3: And I told you the big stuff like the bulkhead, but we work on numerous things at the same time. So we don't distinguish between, you know, microinverters are batteries. We, the company continues to get healthier all the time. So when the component, shortages go away, the supply chain constraints go away.

And I told you the big stuff like the bulk of it but we work on numerous things at the same time. So we don't distinguish between micro Inverters and batteries. We the company continues to get healthier all the time so.

The component.

Just go away the supply chain constraints go away.

Speaker 3: The logistics constraints go away, then we'll have structurally better growth more.

The logistics constraints go away then we'll have structurally better gross margin.

Speaker 7: Great. And then on the one-cube guide

Okay, Great and then on the <unk> guide.

Speaker 7: I was wondering if you could break down the growth that we're gonna see in top line one queue. It could be break it down between volume improvement and I know we're seeing volume improvement on the storage side at 15%. But I guess break it down between volume improvement on the micro side versus pricing increases rolling through.

Just wondering if you could breakdown.

The growth that we're going to see in top line in <unk> can you break it down between volume improvement and I know, we're seeing volume improvement on the storage side of 15%.

But I guess break it down between volume improvement on the micro side versus the pricing increases rolling through.

Speaker 3: Well, the pricing increase is only from March, so it's not going to be for the full quarter. I would say, in fact, a price increase is not going to be March.

Well the price increase is only from modest so it's not going to be for the full quarter out the impact of pricing increase is not going to be much.

Speaker 3: In terms of microinverters, you all know that Q1 is seasonally down, but yet our business is not down. Battery is a 15% increase. So if you assume $600 to $700 or $600 to $800 per kilowatt hour, the price range, you can calculate it yourself. So you can see that there is...

The in terms of.

In terms of micro Inverters you all know that that Q1 is seasonally down but yet router business is not done.

Barclays is a 15% increase so if you if you assume 600 to 700 up 600 $800 per kilowatt hour.

Yes, the price range you can calculated yourself. So you can see that there is.

Speaker 3: Teddy growth on both businesses, both microinvotors and batteries.

Steady growth on both businesses, both micro inverters and batteries.

Okay, great. Thanks, Badri and congrats Eric.

Thank you.

Speaker 1: You are next question comes from the line of Brian Lee from Goldman Sachs. Your question please.

Our next question comes from the line of Brian Lee from Goldman Sachs. Your question. Please.

Speaker 1: Hey guys, thanks for taking the questions. Congratulations Eric on the retirement. You've always been one of my favorite CFP, so you will be missed and look forward to working with you going for many.

Hey, guys. Thanks for taking the questions and congratulations.

On the retirement, you've always been one of my favorite CFO . So you will be missed and look forward to working with you going forward maybe.

Speaker 1: A couple questions I guess. Just, there's a lot of moving parts here. So can you guys, I mean, demand's obviously great and then you're fixing all the supply chain issues from last year, but can you give us also a sense of?

Couple of questions I guess just.

There's a lot of moving parts here. So can you guys I mean demands obviously, great and you're fixing all the supply chain issues from last year, but can you give us also a sense of.

Speaker 1: I guess first on the Q1 Outlook, how much is Clipper Creek adding, and then can you talk about their margins and what that does to your overall margin profile? And then with the price increase on the batteries, are you seeing or anticipating any demand pull forward in Q1 ahead of the price increases that embedded in the Outlook, just wondering if there's anything into Q1 we should be aware of, and then I'd follow up.

I guess first on the Q1 outlook.

How much is Clipper Creek, adding and then can you talk about their margins and what that does to your overall margin profile and then with the price increase on the batteries are you seeing or anticipating any demand pull forward. In Q1 ahead of the price increases that are embedded in the outlook just wondering if.

If theres anything into Q1, we should be aware of and then I had a follow up.

Speaker 3: Yeah, we're not, we're not brazing paper creek. But you know, outright now.

Yes.

They're not breaking Cripple Creek.

Out right now.

Speaker 3: with regarding gross margins. I already said the gross margins of the percreek are in line with them. So you can assume that.

With regarding gross margins.

<unk> said the gross margins after a particularly got in line within fixed so you can assume that.

Speaker 3: With reference to battery price increase, the price increases are beginning in March. So the contribution for Q1 is a little bit less. But do I think that will, you know, that will...

With reference to battery price increase.

These increases are beginning in March so the contribution for Q1.

Little bit less but do I think that will.

That will influence demand.

Speaker 3: I don't think so. It is fairly inelastic right now. Our backlog is quite high. The customers do understand we are taking care of them whenever we are able to. They know that we don't pass all of our costs increase.

I don't think so it is fairly inelastic right now.

Our backlog is quite high the customers do understand we are taking care of them.

Whenever you know.

We are able to they know that we don't pass all of our cost increases.

Speaker 3: We try to absorb them and we only pass whatever we feel like we have to. And we are going to give them plenty of time and that's why it is effective in math. We give them plenty of time to adjust very transparent to them. So, we are not worried about demand.

We try to absorb them and we only pause or whatever.

We feel like we have done so and we are going to give them plenty of time and that's why it is effective in months to give them plenty of time to adjust very transparent to them.

So we are not worried about demand.

Speaker 1: Okay, that sounds great. So I just, as a follow up to that battery, I know Q1 is seasonally a little bit weaker. You would anticipate battery demand and volumes, you know, kind of back to that.

Okay that sounds great. So I guess.

As a follow up to that Badri I know Q1 is seasonally a little bit weaker.

You would anticipate.

Battery demand and volumes kind of back to that 30% sequential growth that you've been seeing.

Speaker 1: 30% sequential growth that you've been seeing, outside of the slightly slower Q1, is that a fair assumption?

Outside of outside of the slightly slower Q1 is that a fair assumption into Q and then.

Speaker 1: in the two q and then uh... another kind of question around for for it is your Q1 outlook i don't think it does but uh... do you anticipate having any for for demand from them three point or uncertainty in california and q on or or that something we might maybe see in two q just wondering if you've either seen any of that or or your uh... forecasting to have some of that in the uh... in the next couple months here thanks guys

Another kind of question around pull forward is your Q1 outlook I don't think it does but.

Do you anticipate having any pull forward demand from NIM, three point or uncertainty in California in Q1 or or is that something we might see in <unk>. Just wondering if you've either seen any of that or your <unk>.

<unk> forecasting to have some of that in the in the next couple of months here. Thanks, guys.

Speaker 3: So I'll give you some numbers for context. We grew 53% from Q3 to Q4.

<unk>.

So I'll give you some numbers for context, we grew 53% from Q3 to give forward and.

Speaker 3: And a 15 person growth from 100 is not too shabby.

And a 15% growth from 100 is not too shabby.

Speaker 3: That's our comment. As yes, we'd like to grow 30% but I already told you the comment on our lead time is 14 to 16 weeks. Our backlog is very strong. Our lead time is 14 to 16 weeks due to logistics. Logistics situation will ease up every quarter a little bit.

That's our comment as yes, we'd like to grow 30%, but I already told you the comment on our our lead time is 14% to 16 weeks. Our backlog is very strong. Our lead time is 14 to 16 weeks utilization the logistics situation will ease up every quarter a little bit so.

Speaker 3: we expect to continuously grow if it is, you know, whether it will be 30%

So we expect to continuously grow if it is.

Yes, whether it'll be 30%.

Speaker 3: or not I cannot make a comment on but we are very happy with our performance and better.

Not I cannot make a comment on but we are very happy with our performance on batteries.

Speaker 3: And Brian , the last portion of the question, can you please repeat so again? I know answer.

And Brian the last portion of the question can you. Please repeat so I can answer.

Speaker 1: The battery just, you know, you're alluded to an M3.0 uncertainty and your opinion on what needs to change, but in terms of impact on your business.

Answer.

But you just you alluded to NIM three point or uncertainty in Europe Union on what needs to change, but in terms of impact on your business.

Speaker 1: Are you actually seeing any demand up and forward in the state of California due to that uncertainty in your Q1 Outlook or is that something you Maybe anticipate work would start to sharpen Q2 if that uncertainty around them 3.0 continues to persist If I were to see the situation before December and after December I wouldn't say you know if I were to extrapolate to the situation I would not say there has been a

Are you actually seeing any demand pull forward in the state of California due to that uncertainty in your Q1 outlook or is that something you maybe anticipate work would start to show up in Q2, if that uncertainty around three point out continues to persist.

If I were busy the situation before December and after it isn't but I wouldn't say you know if.

If I were to extrapolate to the situation I would not say that is b mab.

True.

Speaker 3: And I'm not sure if I can predict you to but...

And.

I'm not I'm not sure if I can predict Q2, but.

Speaker 3: You saw that the PD decision is delayed. I don't know when the news schedule is, but that's good news in general. I guess the installers are taking a breather right.

You saw the you saw that the PD decision is.

It's delayed I don't know when the new schedule is but thats.

Good news agenda like get the installers are taking a breather right now.

Speaker 1: All right, thanks for the thanks for the call. Appreciate it, congratulations. Bye. Great.

Alright, thanks for the thanks for the color appreciate it congrats Eric Okay. Thank you.

Speaker 8: Thank you. Our next question comes in the line of Julian Dumalit from Bank of America. Your question, please.

Thank you. Our next question comes from the line of Julien Dumoulin from Bank of America. Your question. Please.

Speaker 7: Hey, good afternoon team. Congratulations, Eric Banny here. Let me start with an easy one, and I'll follow up with a more complicated one here. Just on the share by-back, I just can you guys talk a little bit more to the top process and further authorization, obviously an incredible year, if you look past tense, prospectively looks like trends, as you already articulate, look pretty robust, shares obviously reacting. How do you think about that? And further authorization.

Hey, good afternoon, Tim Congratulations Eric Vanda here, let.

Let me start with an easy one and I'll follow up with a more complicated one here just on the share buyback.

Can you guys talk a little bit more to the thought process.

And further authorization, obviously incredible year, if you look past tense perspective, it looks like trends as you've already articulated look pretty robust.

Sure. It's obviously reacting how do you think about that and further authorization.

Speaker 3: Yeah, I mean our general philosophy is anti-diilusion.

Our general philosophy is anti dilution. So we look at okay, saying, how do we compensate for that.

Speaker 3: So we look at, okay, saying how do we compensate for that?

Speaker 3: and we decided to share my back. So we first look at, do we have enough capital for this?

And.

We decided to do share buyback. So we first looked at.

Do we have enough capital for the needs of the business.

Speaker 3: The daily needs of the business, do we? If we want to invest in contract manufacturing lines, if we want to do something on batteries, do we have capital for that?

The daily needs of the business do we.

If we wanted to invest in contract manufacturing lines. If we wanted to do something on batteries do we have do we have capital for that.

Speaker 3: That's what we see first. And then we basically look at, okay, are there any M and A's that are in the hopper where we can truly increase the value of the enterprise? So we'll look at that next.

That's that's what we see first.

And.

Then we basically look at okay are there any.

<unk>.

We are in the Hopper, where we can truly increase the value of the enterprise.

We look at that next.

Speaker 3: and we have, we evaluate a lot of companies every quarter. And then if we, we find we have enough for number one, we have enough for number two, then we go down to number three. And number three, what we say is,

And we have we evaluate a lot of companies every quarter and then if we find we have enough for number one we have enough for number two.

We go down to number three and number three what we say.

Okay.

Speaker 3: Am I confident that the share price today is below the conservative intrinsic value for the company? So I look at that.

And my confidence that the share price today is below the conservative intrinsic value for the company.

So I look at that.

And then they make decisions.

Speaker 3: I may not get the lowest top price.

May not hit it I may not get the lowest stock price.

Speaker 3: you know, lowest top price over a period, but I know I bought it because I consider the share the top price below the intrinsic value of the company and that to a conservative value. So that's our top process. And so for this year, we did roughly, you know, over 3 million shares, which was about 2.4%.

Lower stock price over the period, but I know I bought it because I consider the share at the stock price is below the intrinsic value of the company and that we're conservative value. So that's our thought process and so far this year, we did we had roughly.

Over 3 million shares which was about two 4%.

It's a pretty healthy number.

Speaker 3: And you should expect that philosophy from us going forward. We still have, we still have about $200 million left.

And you should expect that philosophy from us going forward, we still have we still have about $200 million left.

Speaker 3: Out of the 500 million dollars authorized by the boat and we will execute on it when we think the time is right.

Out of the $500 million authorized by the board and we will execute on it when we think the time is right.

Speaker 7: that all right excellent and it's just i want to revisit the storage conversation just a bit more it's just to type a couple things that you said back given the the um... lead times that you described it conceivably you have his ability into you know well in the second quarter uh... is he is you start to think about that sixteen weeks out

Got it alright, excellent and then just I want to revisit the storage conversation just a bit more just to tie a couple of things that you set back I mean, given the.

Lead times that you described I mean, conceivably you have visibility into well into the second quarter.

As you start to think about that 16 weeks out and what that means on your thought process. Here. I mean, you also said you're not going to comment on when you break that 180 megawatt hour threshold here, but can you elaborate a little bit more on on how you're thinking about the year shaping up on them, especially given the potential pull forward that could manifest once you get clarity on that policy.

Speaker 7: what that means on your thought process here. I mean, you also said you're not gonna comment when you break that 180 megawatt hour threshold here, but can you elaborate a little bit more on how you're thinking about the year shaping up on them, especially given the potential for that could.

Speaker 7: manifest once you get clarity on that policy as well as Just the underlying demand. I mean as you've already alluded to and has already been discussed I mean the man seems strong. You've posted good numbers 4Q1Q conceivably you've got some degree of visibility in the year I mean maybe a little further parameters on how you're thinking about even stacking and and and

As well as just the underlying demand.

You've already alluded to and it has already been discussed when demand seems strong you've posted good numbers <unk>.

Conceivably you've got.

Some degree of visibility into the year.

Maybe it was for the parameters on how youre thinking about even stacking.

Speaker 7: securing supply around what a number above 180 might look like as well.

Securing supply around what a what a number above 180 might look like as well.

Speaker 3: Yeah, I mean, just to tell you...

Yes, I mean.

Just just to tell you.

Speaker 3: You arrive. The time is 14 to 16 weeks, so we have good visibility. Good visibility on the situation in Q2. And because now we have time for Q2, we are getting things ready.

You are right lead time is 14 to 16 weeks. So we have good visibility.

Good visibility on the situation in Q2.

And because now we have time for Q2, we are getting things ready.

And like what I said that the business is very strong.

Speaker 3: But we are not going to guide Q2 for now. I'm going to have Raghu talk about...

But we're not going to guide Q2 for now.

Have a good talk about.

Speaker 3: the NEM situation and how he sees that thing. Yeah, but regards to NEM 3, you know, the original decision which was supposed to happen now had it coming to effect.

The NIM situation and how he sees that playing out.

To name three.

The original decision, which was supposed to happen now had had.

Coming to effect.

Speaker 3: at least four to five months after the decision was made. And then it also required additional time for the utilities to get up for that change. So realistically was late 2022 or even in 2023 is when it would come into effect. So I just...

At least four to five months. After the decision was made and then it also required additional time for the utilities to get upfront for that change. So realistically was late late 2022 or even in 2023 is when it would come into effect. So I.

Speaker 3: from a pull through in demand was probably not be seen in the least for the next few quarters. It's likely going to be if there is, if nemtry a hold in its current form, which is...

From a from a pull through in demand was probably not be seen in at least for the next few quarters, it's likely going to be if there is if named Tim Hortons in its current form.

Which is.

Speaker 3: may not be likely, demand goes through it likely to happen in the year or even sometime early.

Not likely.

Demand pull through is likely to happen.

The year or even sometime early next year.

Speaker 7: Sounds like everything's good, but a little bit early to talk about exactly how that compares to the earlier guidance, right?

Got it alright sounds like everything is good but a little bit early to talk about exactly how that compares versus the earlier guidance right.

Yep.

Excellent Alright wish you all the best of luck for you too.

Speaker 8: You are next question coming from the line of Colin Rush from Oppenheimer. Your question please.

Thank you. Our next question comes from the line of Colin Rusch from Oppenheimer. Your question. Please.

Speaker 9: Thanks so much. Again, as you start investing in some of the software applications and have the remote upgrade and possibility, how do you think about the business model and the revenue model for some of the software upgrades? Is it still included in the functionality of the hardware? Is there another one that would start thinking about it in the next couple of weeks?

Thanks, So much guys as you start investing in some of the software applications and have the remote.

Great possibility how are you thinking about the business model and the revenue model for some of the software upgrades. So is it still.

Included in the functionality of the hardware is there another one that we might start thinking about the next couple of years.

Speaker 3: You know, it's still included in the functionality of the hardware, the way we think about...

It's still included in the functionality of the hardware the way we think about.

Speaker 3: Of course we have business like Solar Graph Pro.

And of course, we have we have businesses like.

Solar graft probe.

Speaker 3: We have businesses like Pronto now which are software type businesses but if you ask me

We have businesses like Pronto, now, which are software type businesses, but if you ask me.

Speaker 3: If you ask me in reference to upgrade features, etc. The way we think about it is we want to offer more and more and more features, utilizing machine learning and AI, what with a view...

If you asked me in reference to.

<unk> features et cetera, the way, we think about it is.

We wanted to offer more and more and more features.

Utilizing machine learning and AI.

But with a view to improve customer experience.

And so the data that we collect.

Speaker 3: the consumption data, production data, we're not gonna monetize.

The consumption data production data we have.

We are not going to monetize it.

Speaker 3: in the traditional sense and we are not going to aggregate the data in...

And in the in the traditional sense and we are not going to aggregate that data in.

Speaker 3: and do strange things with it. Rather, what we are going to do is we are going to look at patterns in the data. We are going to basically...

And do strange things with it to the other what we are going to do is we're going to lose.

Look at patterns in the data.

We are going to basically develop algar to them, we are going to do regression.

Speaker 3: We are going to ensure that we improve the customer experience going forward. This is, we can do production forecasting.

We are going to ensure that we experience.

We improved the customer experience going forward.

<unk>.

We can do production forecasting we can do consumption forecasting we can we can do grid services events properly we can figure out if it is possible to put it.

Speaker 3: We can do grid services events properly. We can figure out if it is possible.

Speaker 3: to predict the great stability.

The grid stability.

Speaker 3: and provide customers an earlier warning before. So all of those for us are belong to the customer experience.

And provide customers an early warning before so all of those for us.

Belonged to the customer experience bucket.

Speaker 3: And our belief is if we do that properly for customers proactively, they're going to choose us all the time every time.

And.

Belief is if we do that properly for customers proactively.

They are going to choose us.

Hi, everyone.

Speaker 9: Got it. That's helpful. And then just with the, the, the, the, you can update on the state of that NOL and when you're going to start having to pay cash taxes and how you think about the tax rate as we get into that.

Got it that's helpful.

And then just with the.

An update on the state of the NOL.

When youre going to start having to pay cash taxes, how should I think about the tax rate as we get into the out years.

Speaker 5: Sure, I can answer that one. So currently in US, we don't pay material income taxes. We still have accessible NOL. For the upcoming tank and U.S. Friday, we are going to file. We have more than 150 million dollars of federal NOL. And also we have federal and state R&D test credits. So between this year and next year, we don't expect to pay any significant taxes in the US.

Sure I can answer that one for you.

We don't pay much you will incur.

On Texas.

We still have sizable NOL.

For the upcoming 10-K Youll see on Friday, we are going to file we have more than 115 minute on that.

And Noel and also we have.

Federal and state R&D tax credits. So this year next year, we don't expect to pay any significant taxes in the U S.

Great. Thanks, so much you guys.

Thank you.

Speaker 8: But you are next question come to my line, a Mark Strauss from JP Morgan. Your question please.

Thank you. Our next question comes from the line of Mark Strouse from Jpmorgan. Your question. Please.

Speaker 10: Yeah, thanks very much for taking our questions and Eric congrats again, very much well-deserved.

Yes, thanks, very much for taking our questions and Eric Congrats again very much well deserved.

Speaker 10: Bondria, I wanted to go back to, you talked a lot about supply situation on this call. I wanted to go back to the three queue call, though, when you talked about specifically the IQ 8 and the potential for supply constraints there for just the ASICs given your early read on demand, can you just give us an update, you're specific to IQ 8, do you still see that as something worth monitoring this year?

Badri I wanted to go back to you talked a lot about supply situation on this call I wanted to go back to the <unk> call, though when you talked about specifically the IQ eight and the potential for supply constraints. There for just the Asics given your your early read on demand.

Can you just give us an update specific to IQ eight do you still see that as something worth monitoring this year.

Speaker 3: Of course, it's always worth monitoring, but the situation is a little bit better. So IQ 8, we started ramping IQ 8 in late December . So shipped a little in Q4. IQ 8 uses, I mean, overlap between IQ 8 and IQ 7.

Of course, there's always worth monitoring, but the situation is a little bit better. So IQ eight we started ramping IQ eight in late December so shipped a little.

In Q4, IQ eight users I mean, the overlap between IQ eight and IQ seven.

Speaker 3: It's quite high, except for the A6, as you rightly pointed out. We don't see any problems.

It's quite tight.

For the AC.

You rightly pointed out.

We don't see any problems.

Speaker 3: respect to that is like you know supply you know right now so we would be

With respect to that is sick.

Supply right now so we would be.

Heavily ramping.

Speaker 3: the mix of IQ 8 versus IQ 7. That's our preference going forward.

The mix of IQ eight versus IQ seven that's our preference going forward.

Speaker 10: Okay. And then with the facility you're looking at in Europe for microinverters later this year, anything you can share yet regarding the potential output of that on a microinverters per quarter or per year type metric.

Okay, and then with the.

The facility Youre looking at in Europe for micro Inverters later this year.

Anything you can share yet regarding the potential output of that on a microphone burgers per quarter or per year type of metric.

Speaker 3: We haven't finalized the location or the contract manufacturer yet. We are well under negotiations there. But typically what we do is when we install a contract manufacturing facility, we put something called as a complete auto line.

We haven't finalized the location.

The contract manufacturer, yet we are well under negotiations there, but typically what we do is when we install a contract manufacturing facility, we put something called as a complete auto line.

Speaker 3: one full lot of line. One full lot of line is fixed. That's about, you know, 750,000 micro inverters are caught.

One full lot of aligned one full auto line is fixed that's about a 750000 micro inverters a quarter.

Speaker 3: So you can model that thing. We will have likely a full auto line, and we need to finalize the location. We are going to try our best to get it operational by the end of the year. And it will be capable of producing 750,000 microinverse. And we will have a full auto line, and we will have a full auto line.

So you can model that thing, we will have likely a full auto lines.

And we need to finalize the location.

We're going to try our best to get it operational by end of the year and it will be capable of producing 750000 Microgrid works.

<unk>.

Very helpful. Thank you.

Speaker 8: You are next question comes to the line of James West from Evercourt, ISI.

Thank you. Our next question comes from the line of James West from Evercore ISI.

Speaker 8: Hey, good afternoon guys and congrats on my strong fitness to the year.

Hey, good afternoon, guys and congrats on a nice strong finish to the year.

Speaker 8: and also congrats to Eric and Manila for working with you going forward. I wanted to continue on the path of Europe here. I mean, you're pretty excited. You talked about rapid growth. What do you see driving that growth the most in Europe for you and what made you kind of make this decision to build a facility in Europe ? Yeah.

It also congrats to Eric and.

We look forward to working with you going forward I wanted to continue on the path of Europe here I mean, youre pretty excited you talked about rapid growth.

What do you see driving that growth the most in Europe for you and what made you couldn't make this decision to build a facility in Europe .

Yeah.

<unk>.

Europe , we are excited.

Speaker 3: the prospects of growth there. We grew double in 2021 compared to 2020.

The prospects of growth that we grew double in 2021 compared.

2020.

Speaker 3: Europe has been a little bit more advanced than the US in terms of solar.

Europe has been a little bit more advanced than the U S in terms of solar.

Speaker 3: and basically the adoption is quite nice.

And basically the adoption is quite nice debt.

Speaker 3: And we are very strong in Netherlands. We're very strong. France, we are very strong. Belgium, we just introduced storage in Adi.

And we are very strong in Netherlands, with very strong France, we are very strong.

Belgium, we just introduced.

Storage in addition to solar that's nicely ramping gen.

Speaker 3: Germany is one of the very exciting markets in Europe , which is probably over a gigawatt, one gigawatt solar and 80% the touch of that for storage.

Germany is one of them very exciting markets in Europe , which is probably over a gigawatt.

One gigawatt solar and 80% attach of debt, but storage.

Speaker 3: And the reason it's 80% of the damage is most people do self-consumption because of field interest. They don't have netme too.

And the reason is 80% of edge as most people do self consumption because of feed in tariffs then they don't they don't avnet metering feed.

Speaker 3: feed and tariff. So, storage is strong and actually Italy, we are entering Italy.

Feed in tariffs so.

Storage is strong and actually Italy, we are entering into.

Speaker 3: and through our partner, Maxion is our partner as well. And they, you know, with the help of AC modules, we are going to be, you know, ramping on solar in Italy. And now we are going to add...

And through our partner Maxion as a partner as well.

<unk>.

With the help of AC modules.

We are going to be ramping on solar in Italy.

And now we're going to add storage in Italy.

Speaker 3: Spain is very strong, too. Spain is strong, Poland is strong. UK is starting to ramp up. So we have...

Spain is very strong to Spain as strong Poland is strong.

UK is starting to ramp up.

So we have pockets.

Speaker 3: Yeah, actually not even pockets. There's many countries which are in the process of ramping, both solar and storage, and we have plans to introduce

Yeah.

Actually not even bucket with many countries, which are in the process of ramping both solar and storage and we have plans to introduce.

In our storage.

Speaker 3: Through the year, one or two countries every quarter.

Through the year.

Hmm.

One or two countries every quarter.

This year.

Speaker 3: So in general, we are extremely excited in the analyst day if you see in 2019.

So in general we're extremely excited in the analyst day, if you see in 2019.

Speaker 3: 2019 I told you we had a handful of people in Europe like right now five or six people in now

2019, I told you we had a handful of people in Europe like.

Five or six people and now.

Speaker 3: You know, that team we have probably we have 35 to 40 people today. For it. We've increased those, we are going to continue.

That team we have a.

Probably we have 35 to 40 people today.

Right.

We've increased those we are going to continuously ramp that team.

And theyre doing well.

Speaker 8: Great, great. And then on the IQ 8, you talked about, you know, the lower supply issues that you're heavily ramping the mix of IQ 8 replant to. Does that suggest that perhaps you, that normal four to six, cooler adoption period could be on the shorter side? No, no, no, I said that blend to him. Not heavily ramping yet, right? Because we've just started. Got you, okay. We just started, we shipped it in the...

Okay, great Great and then on the IQ eight you talked about.

The rural supply issues that you're heavily ramping the mix about Kuwait, where you plan to does that suggest that perhaps you that normal four to six.

Quarter adoption period could be on the shorter side.

Not on all I say that plan to them not heavily ramping yet right. Because we've just started Scott you just started we shifted ABB.

Speaker 3: late December is when we started ramping and typically our profile I would call a successful ramp 4 to 6 quarters.

May to December is when we started ramping and typically our profile I would call a successful ramp four to six quarters right. That's what I call a successful ramp and we expect IQ eight to fall within that range.

Speaker 3: That's what I call a successful RAM. And we expect I to evaluate to fall within that range.

Speaker 3: You know, having said that we do have installers, for example, like SEMPERSOLEDIS. We did a press release. SEMPERSOLEDIS switched to us because of IQEATS. Right.

Having said that we do have installers for example, like simple Solaris, we did a press release.

Sanford <unk> switch to us because of accurate right.

Right and many installers love.

Speaker 3: sunlight back up featured. They love it. They may not, you know, they may not use it as a significant fraction, but they love the fact that it's got technology and that they can use it if they want. So they'll buy a...

It sounded like backup feature they love it they may not.

They may not use it as a significant threat.

And a fraction, but they love the fact that it's got technology and that they can use it.

If they want.

So they'll buy IQ eight over IQ seven right.

Right.

Got it thanks Bob.

Thank you.

Speaker 8: I think you are next question comes to the line of Cassie Harrison from Piper Sandler. Your question please.

Thank you. Our next question comes from the line of Cashing in Harrison from Piper Sandler Your question. Please.

Speaker 7: Good afternoon. We're wrapped on the corner and Eric, we're wrapped on the retirement.

Good afternoon, congrats on the quarter and Eric Congrats on the retirement.

Thank you.

Speaker 7: question. But if there weren't any logistic related challenges today, in that theoretical world, do you think that demand would be closing in on your 180 megawatt hours of cell supply capacity today, or is that maybe a bit too up?

Fair question, but if there weren't any logistic related challenges today.

Theoretical World do you think that demand would be closing in on your 180 megawatt hours of cell supply capacity today or is that maybe a bit too optimistic.

Speaker 3: Well, you know, I'm not going to break out numbers, but the demand is very...

Okay.

Well I'm not going to breakout numbers, but the demand is very strong.

Speaker 7: Okay, and then maybe a question for either Eric or Mandy.

Okay, and then maybe a question for either Eric or Mandy.

Speaker 7: So I know margins, gross margins for batteries aren't as high as the gross margins for the inverter.

So I know margins gross margins for batteries aren't as high as the gross margins for the Inverters, but I was wondering if you could maybe talk a little bit about the incremental opex associated with battery sales and basically I'm wondering if.

Speaker 7: But I was wondering if you could maybe talk a little bit about the incremental op-x associated with battery sales.

Speaker 7: And basically I'm wondering if you know, if the channels for invers and batteries are so intertwined.

Since the channels for Inverters and batteries are so intertwined.

Speaker 7: Does the gross profit from batteries just go straight into the operating income line with no real impact to op-ed?

The gross profit from batteries just go straight into the operating income line with no real impact to Opex.

Speaker 7: or would you expect an increase in op-x as you ramp batteries as well?

Or.

Would you expect in <unk>.

Increase in Opex as you as you ramp batteries as well.

Well.

Speaker 3: We don't look at it like that. We basically, you know, regardless, you know, the company's model on OpEx. Our baseline is 35, 15 and 20. Time to time we may be a little bit higher on the OpEx site, but we will always be well above the operating income. But we don't think about OpEx like that. For a-

We don't look at it like that we basically now.

Regardless you know the company's model on Opex, our baseline is 30, <unk> and 'twenty time to time, we may be a little bit higher on the opex side, but we will always be available with the operating income.

But.

We don't think about opex like that for US we think about the full system.

Speaker 3: When we think about a full system, it is a micro inverter, it is a battery, it is a gateway, it is a system controller. And when you combine all of these together, okay, I forgot load control, I forgot EV charger.

When we think about the full system. It is a micro inverter.

It is a battery it is the gateway it is a.

System controller.

And when you combine all of these together, okay, yes, I forgot load control I forgot EV charger.

Speaker 3: a general compatibility. When I combine all of those, the number of interactions explode.

Now generate a compatibility when I combine all of those the number of interactions explode.

And the number of interactions explored means our.

Speaker 3: you know, the R&D has to scale up.

Our RMB.

That's just kayla.

Speaker 3: And we cannot scale up our Andy randomly. It will scale up as a fraction of revenue. We have been disciplined there. So.

And then we cannot scale of R&D randomly.

Caleb as a fraction of revenue we have been disciplined.

So.

Speaker 3: It's a long way, I've been a long way in the answer, but you know.

It's a long way being long winded answer but.

Speaker 3: We invest, we invest at a system level.

We invest we invest at a system level.

Speaker 3: And it is not batteries versus microwave, but everything has to scale up in the company.

And it is not batteries versus micro inverter everything is to scale up in the company.

Thank you.

Okay.

Speaker 8: Thank you. Our next question comes to the line of Joe Shows-Masha from Guggenheim Partners. Your question please.

Thank you. Our next question comes from the line of Joseph Osha from Guggenheim Partners. Your question. Please.

Speaker 8: Hi there, and Eric, we look forward to hearing what your next venture is going to be. Two totally unrelated questions. First is regards grid services. You've talked about the progress we're making there. Are you typically working with someone that aggregates and manages resources like a stem or an enbal or an autogrid or this is a situation where you're providing the functionality all the way to facing off to the utility?

Oh, Hi, there Eric.

Hearing what your next venture is gonna be.

Two totally unrelated question first as regards grid services, you've talked about the progress we're making there or are you typically working with someone that aggregates manages resources like our stem or and then Paul are in all of our grid or is this a situation where you're providing the functionality or all the way to face involved.

Colby.

Speaker 3: We know both business models. We work, for example, in the connected solutions program, we work with an aggregator called Energy Hub. And.

We do both business models. We work for example in the in the connected solutions program, we work with an aggregator paradigm energy hub.

And they work with the three utilities in.

Speaker 3: you know the three utilities I talked about and we work in that model but you know having said that are

The two utilities I talked about and we worked in that model, but you know having said that.

Speaker 3: Our relationships are getting better with the utilities and we are starting to work directly with the utilities.

Our relationships are getting better with the utilities and we are starting to work directly with the utility.

Speaker 3: The APS program will show that you're going to start seeing more announcements, like what I said we have a dozen grid services engagement engagement.

The Aps programs that youre going to start seeing more announcements like what I said, we have a dozen services engagements engagements.

Speaker 3: in the pipe and many of them are working directly with the utilities and we do have all of the software capable

In the pipe and many of them are working directly with the utilities and we do have all of the software capability.

Speaker 3: All of the VPP capabilities dispatching and dispatching a fleet at an aggregate level, we can provide that software to the utility.

All of the VP PK parameter that is dispatching.

And in our dispatching a fleet at an aggregate level, we can provide that software to the utility.

Speaker 3: they can utilize that software to control an M-phase fleet.

And they can utilize that software to control and Enphase fleet.

Speaker 11: Okay, so that's interesting. You've got that whole stack. Thank you, that's very helpful. Totally unrelated question. Looking at your success in Europe , obviously that market's growing. If you had to sort of split up your growth there into market growth versus share gain, these of the, you know, still some of the fairly large legacy string and birter providers there. I'm wondering how you might think about this.

Okay. So thats interesting you've got you've got that whole stack. Thank you bet scores are helpful. Totally totally unrelated question looking at your success in Europe , obviously that market is growing if you had to sort of split up your growth there into our market growth versus share gains B b.

Some of the fairly large legacy stream Burger.

<unk> I'm wondering how you might think about that.

Speaker 3: You're talking about with reference to Euro.

You are talking about with.

The reference to Europe .

Speaker 11: Yeah, yeah, sorry, that was a convoluted question. Let me try it again. How much is your growth, you think coming from just the market growing in Europe and how much is coming from taking care? Yeah.

Yeah, Yeah sure Ive got convoluted question, let me try it again, how much of your growth you think is coming from just the market growing in Europe , and how much is coming from taking share.

Yeah, I would say mix of both.

Speaker 3: You know, obviously the market is growing and therefore we get our fair share, especially in places like Netherlands and France. And primarily what moves...

Obviously, the market is growing and therefore, we get a fair share, especially in places like Netherlands, and France, and primarily what moves competitors.

Speaker 3: Compositors are, you know, what moves customers to us is our quality and our service

Most customers to us is that quality and service.

Speaker 3: as we are able to maintain our target 500 dppm which is 0.05% annual failure rate.

Is that as long as we are able to maintain our target 500, BPM, which is 0.05% annual failure rate at.

Speaker 3: as long as we are able to maintain it on microinverter, as long as we provide outstanding customer service, 24 by seven, two customers.

As long as we are able to maintain it on micro inverters as long as we provide outstanding customer service 20 foot by seven two customers.

Ill.

<unk>.

We think.

We have the bridge there.

Speaker 3: That's the big reason why customers move over.

And so that's that.

That's a big reason why customers move over to us.

Speaker 11: The reason I'm asking, and I'll go in a minute here, is that in the US, obviously, it's just down to you and what competitor you're at in Europe , but it definitely is not. So I'm just wondering if we could pause if we imagine a future in a couple of years, where really it's only you and your main competitor and some of these string and vertical companies just just go away. So.

Yes, the reason I'm asking it all go away in a minute here.

Obviously <unk> and.

And one competitor in Europe .

In Europe , it's definitely not.

I'm just wondering if we could pause if we imagine a future in a couple of years, where really it's normally you and your main competitor in some of these string inverter companies just go away.

Well I mean look.

Speaker 3: We can't predict the future, but the reasons are very similar. People are tired of enduring that quality product.

We can't predict the future, but the reasons are very similar people are tired of.

And during.

Bad quality product.

And that's the single most reason they come to us.

We are a little bit.

Speaker 3: here you know expensive but you cannot be looking at expense you cannot be looking at pricing in vacuum you gotta be looking at the entire cost of ownership

Expenses.

But you cannot be looking at expense you cannot be looking at pricing.

In vacuum you got to be looking at the entire cost of ownership.

Speaker 3: And you know, as long as we maintain our quality.

And.

As long as we maintain our quality.

Speaker 3: what I said, that's the most important thing, which we are committed to and the customer experience that cannot let us down.

Like what I said, that's the most important.

<unk>, which we are committed to and the customer experience.

That cannot let us down.

We have engineered a game shift thank you.

Okay. Thank you. Thank you very much.

Speaker 8: If you are an ex-question, come to the line of, I mean, from BMO capital markets, your question please.

Thank you. Our next question comes from the line of <unk> from BMO capital markets. Your question. Please.

Speaker 9: Good afternoon. Thank you for taking my question. Most of my questions have been asked, but I was just wondering if you guys had any sense or color on how much of the battery capacity you delivered today. It's been for customers that are actually retrofitting existing systems versus a kind of new solar PV plus storage installations.

Good afternoon. Thank you for taking my question.

I think most of my questions have been asked but I was just wondering if you guys had any sense or color on how much of the battery capacity you've delivered to date, it's been for customers that are actually retrofitting existing systems versus kind of new solar PV plus storage installation.

Speaker 12: Was that included, the retrofit opportunity? Was that included in your, I guess, AMO State presentation when you guys talked about a serviceable, addressable market of 1.5 gigawatts?

Was that included the retrofit opportunity was that included in your analyst.

Analyst day presentation. When you guys talked about a serviceable addressable market of one five gigawatt hours.

Speaker 3: it was and it's hard to track but I would say

It was and.

It's hard to track, but I would say.

Speaker 3: I would say that is a good healthy mix of both. That's what I would say.

I would say that is a good healthy mix of both.

What I would say.

Speaker 3: And you know, obviously when they have NFase microinverters, they would prefer NFase batteries.

And.

Obviously, when they have enphase micro inverters they.

Preferred enphase batteries.

Yeah.

Great. Thank you for that congratulations on the quarter.

Thank you.

Okay.

Speaker 1: Thank you. Our next question comes to line up. Brenney Satish from Wells Fargo. Your question, please.

Thank you. Our next question comes from the line of <unk> Satish from Wells Fargo. Your question. Please.

Speaker 6: I get afternoon, can you talk about the IQ 8D and how that roll out is progressing? And I guess for the small commercial market is it enough to win over the installers that serve this market or do you need to ultimately partner with someone like a developer that really accelerate deployment into the commercial market?

Hi, Good afternoon can you talk about the IQ eight and how that rollout is progressing and I guess for the small commercial market is it enough to win over the installers that serve this market or do you need to ultimately partner with someone.

Like a developer to really accelerate deployment into the commercial market.

Speaker 3: I give a deep product as a little bit late.

The product is a little bit late.

Speaker 3: As you know, I thought we would be in production in Q1, but we are a little late. And the reason why we are a little late is...

Yes.

I thought we would be in production in Q1, but we had a little late.

And the reason why we are the latest.

Speaker 3: you would like to take the time and do the full system.

We would like to take the time and do the full system.

And I would say the full system I mean.

Speaker 3: It is not just a microinverter, which is already qualified and passed compliance. It is the gateway, the cloud shaft where the fleet...

It is not just a micro inverter, which is already qualified and passed compliance.

It is it is.

The the gateway the cloud software.

The fleet management.

The design proposal software.

Permitting software.

Speaker 3: And the reason why we like the small commercial market is because it is an extension of residential market. In residential, we saw

And the reason why we like the small commercial market is because it is an extension of residential market.

In residential we service up to 20 kilowatts.

Speaker 3: That goes from 20 small commercial, goes from 20 to 200 kilohertz. And why is that important? Is...

That goes from 20 Smart commercial goes from 20 to 200 kilowatts.

And why is that important.

The same long tail installers.

Speaker 3: or the ones who participate in the small commercial markets.

Are the ones who participate in the small commercial markets.

And Thats our focus.

Speaker 3: That's our focus. That's where we think we add a lot of value because the pain points are the same.

That's our focus that's where we think we add a lot of value because the pain points out of the same.

It is quality and service.

Speaker 3: and we do have to pay attention to those areas and the challenges will be a little bit different as we go from 20 kilowatts to 200 kilowatts. You know, we have used PLC for communication and now when you are doing it with hundreds of microinverters, those will be stretched. But we look...

And we do have to pay attention to those areas and the challenges will be a little bit different as we go from 20 kilowatts to 200 kilowatts.

We have we use plc for communication and know whether youre doing it with hundreds of micro inverters those will be stretched.

We look forward to.

Speaker 3: You know, we are ramping with those installers we already know and do business with and we

You're ramping with those installers, we already know and do business with.

And we can do rapid shutdown as well.

Speaker 3: you know easily so that's a major driving force versus other you know other competition so so in short it's the similar install basis residential we have the relationships already the any traffic shutdown

Easily so thats, a major driving force versus other.

Other competition so so in short.

It's the similar installed basis residential.

Have the relationships already.

They need rapid shutdown.

They need very high quality they need great service.

And it's a natural extension for us from residential.

Speaker 12: And just to follow up, what then is your latest timing in terms of IQ A-D?

Thanks, and just a follow up.

Dennis your latest timing in terms of IQ <unk>.

Speaker 3: Yeah, like what I said, we are going to ship the select installers.

Yes, like what I said, we are going to ship to select installers.

Speaker 3: for a pilot ramp in Q1. So we'll have a small revenue in Q1.

For the pilot ramp in Q1, so we will have a small revenue in Q1.

Speaker 3: But real ramp will be over the next few quarters. This is not a

But the real ramp will be over the next few quarters. This is not a.

Speaker 3: You know, it's not that when I'm ready, I start ramping immediately from day one. It will take some time for the market to develop.

It's not that when I'm ready I start ramping immediately from day one it is it will take some time for the market to develop.

Speaker 3: So you should expect over the next several quarters, it will ram to a healthy level and we...

There. So you should expect over the next several quarters as Remington it'll ramp to a healthy level and we.

Speaker 3: We we dont release this? on a part today not today

Broke.

We broke down those.

Those details in the analyst day.

Got it that's it for me and congrats Eric on the retirement.

Thank you.

Speaker 8: Thank you. Our nextquestion com ang to human inflation from mole research.

Thank you. Our next question comes from the line of Steven Fleishman from Wolfe Research.

Speaker 7: Just a question, maybe to put NEM 3.0 in some context. Could you give us?

Yeah.

Just a question.

Maybe to put any M. Three <unk> in some context could you give us.

Speaker 7: from sense of what percent of revenue is coming from California in your Q-1 forecast or from 2021 actuals.

Some sense of what percent of revenue is coming from California in your Q1 forecast or from 2021 actuals.

Speaker 3: Yeah, I'm not sure about the exact number. I would estimate something like, you know, 20, 20% of our revenue.

Yes, Im not sure what the exact number.

It remains something like.

20.

Yes, 20% of our revenue roughly overall revenue.

Okay.

Great.

Speaker 6: And then, uh, separate question, just in some of the, I know, uh, BVBs kind of disappear from focus, uh, recently, but some of the versions later versions included.

And then.

Separate question just in some of the I know BBB kind of disappeared from focus recently, but.

Some of the <unk>.

Bergen later versions included.

Speaker 9: subdities for domestic production in borders and including microinborders.

Subsidies for domestic production and burgers, including micro Inverters.

Speaker 6: If we were to ultimately get a bill that had that in there, how quickly could you shift to domestic production?

If you if we were to ultimately get a bill that that had that in there how quickly could you shift to domestic production.

Speaker 3: So the BBB, the one in debate is the 11th sense per watt credit.

So.

The BBB, the Wan and debated 11 cents per watt credit.

But micro inverters.

Speaker 3: And you know that we will never do manufacturing ourselves. We will enlist the help of our contract manufacturers. It's quite attractive to have...

And you know that we are we will never do manufacturing ourselves, we will enlist the help of our contract manufacturers.

Quite attractive.

To have a made in America product with that kind of credit.

Speaker 3: And we do have contract manufacturers who are potentially lined up should this happen.

And we do have contract manufacturers, who are potentially lined up should this happen.

Speaker 3: question on how long it will take from when we, you know, I select a contract manufacturer to when we can start ramping in the US would take me six to nine months.

Question on how long it will take from when we select a contract manufacturer to <unk>.

When we can start ramping in the U S will take six to nine months.

Great.

Thank you I appreciate it.

Thank you.

Speaker 8: You are next question comes to the line of Sophie Carp from Keybank. Your question?

Thank you. Our next question comes from the line of Sophie Karp from Keybanc. Your question. Please.

Speaker 13: Hi, good afternoon. Thank you for taking my question and congratulations again on a great quarter.

Hi.

Good afternoon. Thank you for taking my question and congrats on the aspirations again on a great quarter.

Speaker 13: All of the questions kind of been answered, maybe just a couple from me. First, how do you envision your year shaping up step-and-step, I guess, the unpredictable events, such as the outcome of them or any major disruptions? You grow so fast that the analysis almost doesn't matter, but should we be expecting maybe a sum of positive priorities? Sofna, somewhere throughout the year, based on your seasonal patterns.

Our questions have been answered maybe just a couple from me.

How do you envision your year shaping up setting aside I guess.

And then.

Unpredictable events, such as the outcome of them or any major disruption.

So fast that seasonality almost doesn't matter, but should we be expecting maybe some pockets though.

Softness somewhere throughout the year based on seasonal pattern.

Speaker 3: I think our business is fairly diversified that between the different states in Europe , between not just shipping solar, sorry, different states in the US, and not just shipping solar only, but you're seeing that solar storage is also...

I think our business is fairly diversified.

Between the different states in Europe between not just shipping solar totally different states in the U S and not just simply shipping solar only but youre seeing that.

A lot of storage is also.

Speaker 3: You know, many different states are now, you know, the tax rates are continuing to grow up well beyond California, California, Florida, Texas, Puerto Rico, Hawaii, East Coast, et cetera. The services is becoming the business of the grid services also continuing to grow.

Many different states are now.

The attach rates are continuing to grow up.

Well beyond, California, California, Florida, Texas, where recall, Hawaii disclosed etcetera and grid services is becoming the.

The business is good service is also continuing to grow.

Speaker 3: We talked about how fast Europe is growing. We'll, you know, over the year, more storage will start shipping storage into newer countries in Europe as well. So in general, and as well as countries like Brazil is continuing to grow. So what you're seeing is our business being more and more diversified.

We talked about how fast Europe is growing.

Over the year more storage.

Start shipping storage into new countries in Europe , as well so in general and as well as in countries like Brazil is continuing to grow so what youre seeing is a business being more and more diversified.

Speaker 3: Not only within the US, not only within California, but outside of California, other states in US and Europe as well. So while we may see these occasional road bumps like an M3 issue here in California, I think the business is pretty robust anymore that we'll be able to absorb those bumps.

Not only within the U S not only within California, but outside of California.

Other states in U S and Europe as well so while we may see these occasional road bumps like like a NIM three issue here in California.

The business is pretty robust anymore.

We'll be able to absorb those pumps.

Speaker 13: Thank you. And as a follow-up question, it's maybe sitting around, talk a little bit about what you're using now and MNA you're using the transaction, but very small. Is there anything out there, I guess, that you use the potential attractors opportunities in some spaces or some technologists that you may look into potentially doing modules this year? Well, I mean, we have a strategy.

Thank you.

As a follow up question.

Maybe if you can talk a little bit about what your views are now in M&A.

Vaccines, but fairly small is there anything out there I guess.

Or is that potentially attractive opportunities.

Yes.

Or technologies that you may look into potentially doing more deals this year.

Well I mean, we have a strategy.

The strategy is basically.

Speaker 3: selling best in class, you know, products for home energy systems.

Selling best in class products for the home energy system.

Speaker 3: two homeowners through our installers and distribution partners enabled by digital

To homeowners through our installers and distribution partners enabled by a digital platform.

Speaker 3: So components of a home energy system, if you see, we have solar, we have storage, we have grid services, we're compatible to generators, we have load control, we didn't have EV before, we bought EV chargers. We think EV chargers is, you know, they need to be managed.

No.

<unk> of our home energy system, if you see we have solar.

Storage, we have grid services.

<unk> to generators have load control we.

We didn't have even before we bought EV Chargers, we think EV Chargers.

They need to be managed.

And we bought them for that reason.

We have fuel cell partnerships.

Speaker 3: There's nothing much to talk about it yet, we'll talk about it when we are ready.

Nothing much to talk about it yet we'll talk about it and then when we are ready there.

Speaker 3: that's on the home energy system. So we'll continue to add more and more things at a product level there if it is aligned with our threads.

That's on the home energy system. So we will continue to add more and more things at a product level. There. If it is if it is aligned with our strategy.

Speaker 3: And I cannot talk about any specific companies right now. On the install digital blood.

And I'm not you know.

I cannot talk about any.

Specific companies right now on the installer digital platform.

Speaker 3: There are six pieces which I mentioned in the analyst's day, which is lead management.

There are six pieces, which I mentioned in the analyst day, which is which is lead management.

Speaker 3: is an interesting area for us and we will keep you informed when our plans are finalized there. So that's potentially...

Which is an interesting area for US then we'll in farm.

We will keep you informed when when our plans are finalized there so thats a potential area.

Speaker 3: Design and proposal software, we bought a company solar graph pro and we are making it meaning a soft desk and we are making it a lot better.

Design and proposal software, we bought a company solar graph pro and we are making it meaning soft desk and we are making it a lot better.

Speaker 3: by introducing shading, by introducing storage, 3D, all bells and whistles, so we are making that better.

By introducing shading by introducing storage <unk>, all bells and whistles, so we're making that better.

Then permitting services.

Speaker 3: our team in NIDA services nearly 30% of the entire North American solar business, solar permitting.

Our team in Noida services, nearly 30% of the entire North American.

Solar business solar permitting business.

Speaker 3: they do that today and we are going to make that better in terms of injecting more automobiles.

They do that today, and we are going to make that better in terms of injecting more automation et cetera.

Speaker 3: then will come to commissioning software. There...

Then we'll come to commissioning software there.

<unk>.

Speaker 3: It's homegrown and there is no way we are going to buy a company for that. It's got hundreds of man ears of work in it and we are going to make that continuously better. We have a very large...

It's homegrown and there is no way, we are going to buy a company for that.

It's got hundreds of many years of working it and we're going to make the continuously better we have a very large team there.

Speaker 3: Then comes the enlightened mobile app. This is the homeowner app, you know, monitoring, fleet management, etc. Which again, enormous, you know, investment, hundreds of manures, and we will grow organically there. O&M.

Then comes the enlighten mobile App. This is a homeowner app monitoring fleet management et cetera, which again and normal.

Investments hundreds of millions.

We'll grow organically that O&M.

Speaker 3: We saw the investments that we made in 365 pronto. These are software platforms, that's how we like it. We're not gonna get into these.

You saw the investments that we made in 365 pronto.

Software platform, that's why we like it.

We're not going to get into the.

Speaker 3: know, in M itself, we're not going to have traction lattice, but we are going to enable transactions with a two-sided market place.

O&M itself, we're not gonna have tracks and led us, but we are going to enable enable transactions with a two sided marketplace.

Speaker 3: customers on one hand, you know, service providers on the other hand and we connect both of them. It's a two-sided marketplace.

Estimate is on one hand, you know service providers on the other hand, and we connect both of them the.

Two sided marketplace. So.

Speaker 3: In other two components, you have to be thinking of is best in class home energy system.

The two component, we ought to be thinking up with best in class home energy systems.

Speaker 3: Best in class digital, install digital platform and whatever acquisitions we need for that we will do.

Best in class digital installer digital platform and whatever acquisitions, we mean that we will do.

Speaker 3: but those will likely be small acquisitions. They'll be talking, there is no silver bullet.

But those will likely be small acquisitions there'll be tuck in.

There is no silver bullet.

Got it thank you so much.

Thank you.

Speaker 1: that you are next question comes from the line of Tristan Richardson from Trist your question please

You. Our next question comes from the line of Tristan Richardson from Truest. Your question. Please.

Speaker 12: Hey, good evening guys. Really appreciate all the commentary tonight. Just one from me on the EV charging product. Now that you've had that under the umbrella, a few months, curious about the innovation pipeline there and whether it be vehicle to grid or vehicle to home.

Hey, good evening, guys really appreciate all the commentary and I just just one for me.

On the EV charging product now that you've had that under the umbrella of few months I'm curious about the innovation pipeline, there and whether it be vehicle to grid or vehicle to home and.

Speaker 12: potential there to develop that product or if so, could that be margin-accretive? Or you see more of the EV charging product complementary to just your core-on-combo strategy?

The potential there too.

Develop that product or.

And if so could that be margin accretive.

Or are you seeing more of the.

EV charging product complementary to just your core ensemble strategy.

Speaker 3: Yeah, so I'm going to articulate a little bit on what we are doing tactically, maybe for the next few months and then you know, Rahul will talk about the vision.

Yes, so I'm going to articulate a little bit on what we are doing Tac.

Tactically maybe for the next few months and then Rocco will talk about the vision.

Speaker 3: V2H and V2G. So, we're very happy with the acquisition, Clipper.

<unk> to be too rich and BCG. So we're very happy with the acquisition Cooper Creek.

Speaker 3: They already make very high quality level 2 chargers. They have ship...

They already make very high quality level, two chargers they have shipped.

Speaker 3: 110,000 of them. Healthy revenue, growing and the market is growing at a 40% Kager. Like what we told you at the analyst day and very nice grocery margins, profitable business. So we're very happy there. All we want there

110000 of them healthy revenue growing and the market is growing at a 40% CAGR.

We told you at the analyst day.

Very nice gross margins profitable business.

So we're very happy that all of the one that is.

And immediately we wanted to do three things give them a lot of scale.

Speaker 3: KL means only a contract manufacturer can do it properly.

Scale means.

Only a contract manufacturer can do it properly.

Speaker 3: professionalize that that's number one number two is introduce paper creek chargers to our installers and

So professional life that's number one number two is introduced.

Chargers to our installers and distributors.

Speaker 3: And obviously we need to make sure the supply chain is robust there and that's why I said that we need to transfer to contract manufacturing.

And obviously, we need to make sure the supply chain is robust there and thats why.

I said that we need to transfer to contract manufacturing.

Speaker 3: The three, which is important is I'd like every Cleopatra Creek Chargers shipped from the contract manufacturer to have connectivity.

Three which is important as I Blake every Q3 charge of shipped from the contract manufacturer to.

To have connectivity in it and that connectivity is extremely important because.

Speaker 3: And that connectivity is extremely important because you know, we need to make these charges intelligent.

We need to make these charges intelligence.

Speaker 3: They need to be able to support, you know, optimize tariffs. They need to be able to support charging on a schedule.

They need to be able to support.

Optimize tariff they need to be able to support charging on a schedule.

Speaker 3: They should help support green electrons. If a homeowner says, I want to utilize solar.

They should help.

Support Green electron differ if a homeowner states I want I wonder utilize solar.

Speaker 3: for maybe charging, you should be able to pick that preference immediately and make that happen.

But my EV charging you should be able to pick that preference immediately and make that happen.

Speaker 3: should be able to work with the ensemble system seamless. So, you know.

It should be able to work with the ensemble system seamless.

So.

Connectivity will help us on those fronts.

Speaker 3: Those are the three actions that we are thinking immediately. And then comes, you know, international expansion is another one which I should, which I should have said, that's in our short term focus.

So those are the three actions that we're thinking immediately and then.

Hum.

International expansion is another one which I should tell you should have said that that's in our short term focus which is.

Speaker 3: Europe is a very big market for EV, so it's obvious that we need to be in Europe . So we are going to be starting to ramp heavily in that front, in a ramp or plan.

Europe is a very big market.

For the Evs, so it's obvious that we need to be in Europe . So we are going to be we are going to be starting to ramp heavily in that front and ramp up plans there.

Speaker 3: The last one is by directionality. So Ragooh is going to talk about that. Yeah, I think, you know, as Buzzy mentioned, integrating EV into Ensemble, where you're treating EV purely as a load, brings a lot of value for the homeowner because you can really control, you can decide on what the sources, electrons are, the duration, the rate, etc. So a lot of value in the energy management system. But beyond that, EV just...

The last one is bi directionality sort of who's going to talk about that I think.

Mentioned integrating EV into ensemble recruiting EV purely as a load brings a lot of value for the homeowner because you can you can really control it.

Can decide on what the source of electrons out the duration, the REIT et cetera a.

A lot of value in the energy management system with beyond that just as a.

Speaker 3: should not be looked at simply as a load, there's an opportunity to do reverse power flow there, which is fully bi-directional, where you can use the EV for things such as grid services as well as for resiliency. So the grid services part would be the wafer to grid part, and then the resiliency part would be the wafer to home part in the event of an outage. You have this extra significant amount of source there, which is about 100 kilowatt hours. Can that participate and keep your home, keep the home microgrid sustained in the event?

Should not be looked at simply as a load there is an opportunity to do reverse power flow dead, which is fully bidirectional, where you can use the EV for.

Both for things such as grid services as well as for resiliency. So the grid services part would be the vehicle to grid Park and then the resiliency part would be the vehicle to home part in the event of an outage you have this extra significant amount of source said, which is about 100 kilowatt hours and that participate and keep your home keep the home micro grid.

Sustained in the event of an outage so both of those both vehicle to grid and vehicle to home requires some development.

Speaker 3: So both of those, both vehicle to grade and vehicle to home requires some development. And that development includes whether, you know, decisions have to be made whether you're going to deliver that energy with DC or AC. And for us, it doesn't matter. We are open to doing it with both AC or DC or IQ 8 as capable of...

In fact development includes weather.

Decisions have to be made whether youre going to deliver the energy with D C or D C doesn't and for US It doesn't matter. If we are open to doing it with both <unk> eight is capable of delivering of providing DC interface into the car or in AC.

Speaker 3: Delivering of providing a DC interface into the car or an AC.

Speaker 3: In addition to that, there are a few other things, challenges that need to be solved. My standards development still needs to complete. There are a couple of standards, you see us in Chathamot today, but I think there are, IEEE standards are being developed to figure out how to do this bidirectional power flow.

Issued to that there are a few other things challenges that need to be solved my standards development still needs to complete.

There are a couple of standard Ccs in China more today, but.

I think I took lease standards are being developed to do to figure out how to do this by directional bidirectional power flow and finally, Oh, great interaction is pretty complex because now the vision is to be fully compliant to all the advanced group function requirement. So we are.

Speaker 3: And finally, the grid interaction is pretty complex because now the EV has to be fully compliant to all the advanced grid function requirements. So we are diving deep into it. We are laying out the full plan, but regardless of whether we do it to AC to ACNFF or AC to DCNFF or our IQH are capable of providing both of those. And I think bringing...

We are diving deep into it we are laying out the full plan, but regardless of whether we do it through an AC to AC interface on a DC to DC interface.

<unk> capable of providing both of those and I think bringing the EDI onto the ensemble platform and providing and not just being a smart load, but also being a very intelligent source brings a lot of value for our customers.

Speaker 3: the EVO onto the Ensemble platform and providing and not just being a smart load, but also being a very intelligent source brings a lot of value for our customers.

Badri. Thank you Eric all the best deal.

Speaker 1: Thank you, our next question comes to the line of Eric Stein from Craig Hallum. Your question, please.

Thank you. Our next question comes from the line of Eric Stine from Craig Hallum. Your question. Please.

Speaker 10: Hello, just sneaking one in here on Clepper Creek. I know you just touched on that, but just curious. I mean, based on the nature of that product, when you do install, roll that out to the installer network, I mean, how do you see that play out, maybe compare it to the storage product, and then curious, how do you think of this, or how should we think of it in terms of attach rates, or maybe capture rate of spend per home, just anything like that. The guy that's going forward.

Hello.

<unk> in here on Clipper Creek I know you just touched on that but just curious I mean based on the nature of that product when you're doing start roll that out to the installer network I mean, how do you how do you see that play out maybe compare it to the storage product and I'm curious.

How do you think of this or how should we think of it in terms of attach rates or maybe capture rate.

Spend per home.

Anything like that to guide us going forward.

Speaker 3: Yeah, I mean, with regarding the introduction to our installers, we think they will laugh it up. They would love it because...

Yes, I mean with regarding the introduction Dr. Installers, we think they will lap it up.

They would love it because solar plus storage plus.

Speaker 3: Evie charging, you know, infrastructure setting up in your home, they would love that because

EV charging infrastructure setting up.

In your home they would love that because.

It Ain't that expense.

Speaker 3: I mean with a fully installed, you know, maybe with all installation and EV charger install will cost you $1,500. And if you couple it with solar plus storage, it might even be lower.

I mean with the fully and stored.

Maybe with all installation of EV charger installed.

Cost you $1500.

If you couple it with solar plus storage it might even be lower.

Speaker 3: And there is obviously tax, credit, etc. That...

And that is obviously tax credit et cetera that are there so.

Speaker 3: that are there. So, you know, we think it's a general positive

We think as a general positive.

Speaker 3: And that's why we are excited to introduce it to our installers and distributors and globally.

And Thats why we are excited to introduce it to our installers and distributors and globally as well.

Speaker 10: got it so i mean really in terms of thinking about the growth it's more about as you said getting the contract man you manufacture in place getting the supply chain in place rather than limitations being training installers and attach rates are educating the customer and this is really about getting the manufacturing side in place that's right is a relatively simple product to get installed there's some education but not terribly come

Got it.

Really in terms of thinking about the growth it's more about as you said getting the contract manufacturer in place getting the supply chain in place rather than the limitations being training installers and <unk>.

Tax rates are educating the customer I mean, this is really about just getting the manufacturing site in place.

Is it relatively simple product to it and saw that some education, but not terribly complicated and of course, we got to get the secret sauce, right, which is which is make sure that it is comparable to an ensemble system and provides that intelligence.

Speaker 3: And of course we got to get the secret sauce right, which is make sure that it is compatible to an ensemble system and provide that intelligence.

Speaker 3: homeowner and in terms of you know thinking about the business you you know I don't need to tell you but you can correlate the business directly to the growth of EV so if it's the EV's grow at

To the homeowner and in terms of thinking about the business you.

I don't need to tell you but.

Can correlate the business directly to the growth of EV.

The evs grow it.

Speaker 3: 40% for example cager these will grow even faster them

40% for example, CAGR this will grow even faster than that.

Speaker 3: And so, yes, it's going to be a healthy Kaggle and we need to get our manufacturing straight. That's why we are moving one-track manufacturing.

And so.

Yes, it's going to be.

Healthy category, and we need to get out of manufacturing straight that's why we are moving.

Contract manufacturing house.

Okay. Thank you.

Speaker 1: Thank you. You are a final question for today. So I'm kind of a little months down from Raymond James. Your question?

Yeah.

Thank you our final question for today comes from the line up.

From Raymond James Your question. Please.

Speaker 14: Thanks for taking the question, Aj. Just one for me also about Clipper Creek. You mentioned that...

Thanks for taking the question.

Just one for me also about Clipper Creek, you mentioned that in.

Speaker 14: installer awareness and skill set is not a constraint. But in practical terms, what portion of your existing

Installer awareness and skill set is not a constraint.

In practical terms what.

Forshan of your existing.

Speaker 14: kind of installation customers are have any historical background in installing.

Installation customers are have any historical background in installing charging equipment in homes.

Speaker 14: charging equipment in homes. Is there a number or a percentage that you can provide?

Is there a number or a percentage that you can provide.

Speaker 3: Yeah, I wouldn't be able to provide it now, but I would say that there is probably a 20 to 30% overlap. That's my guess.

I wouldn't be able to provide it now, but I would say that there there is probably 20% to 30% overlap that's my guess.

Okay very good.

Speaker 3: And in very minor installing is a supply equipment.

And bear in mind that installing as the supply of equipment and so they already have the main the main panel open when they are installing solar plus storage and so coming in and installing a piece of equipment on the wall and.

Speaker 3: And so they already have the main panel open when they're installing solar plus storage. And so coming in and installing a piece of equipment on the wall and going a conduit and a 40 amps and landing it on a 40 amp circuit is going to be pretty straightforward.

Growing our Congress.

<unk> and I need to get on a 40 amp circuit that would be pretty straightforward it's what.

Speaker 3: the kind of work that they do already with solar and storage. So I don't see a huge jump in requirement in training or skill set to do that.

Work that they do already with solar and storage so I don't see.

Huge jump in requirement in training or skill set to do that.

Okay I appreciate it.

Speaker 8: If they do, this does conclude the question and answer session of today's program. I now like to hand the program back to Baudry, Kathan, Doraman, for any further remarks.

Thank you.

Thank you. This does conclude the question and answer session of today's program I'd now like to hand, the program back to Badri, Qatar to Robin for any further remarks.

Speaker 3: Thank you for joining us today and for your continued support of NFAs. We look forward to speaking with you again next quarter.

Yeah. Thank you for joining us today and for your continued support of Enphase. We look forward to speaking with you again next quarter.

Thank you.

Yeah.

Speaker 8: that you ladies and gentlemen for your participation in today's conference. This does include the program you may now disconnect. Good day.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

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Speaker 8: Thank you for standing by and welcome to the N5th Energy Force Quarter 2021 Financial Results Conference call. At this time, all participants are on list in only mode. After the speaker's presentation, there will be a question on answer session.

Thank you for standing by and welcome to the Enphase Energy fourth quarter 2021 financial results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

Speaker 8: If you'd like to ask a question at the time, please press star at the one on your touchtone telephone. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Karen Faggot. Please go ahead.

Like to ask a question at that time. Please press Star then one on your touch tone telephone as a reminder, today's program is being recorded I would now like to introduce your host for today's program Karen <unk>. Please go ahead.

Speaker 2: Good afternoon and thank you for joining us on today's conference call to discuss and seize energy's fourth quarter 2021 results. On today's call, our Bob Jikuthan Duraman and Saisan's president and chief executive officer, Eric Brander is chief financial officer, Mandy Yang, chief accounting officer and corporate treasurer, and Regou Balloir chief product officer. After the market closed today, Saisan issued a press release announcing the results for its fourth quarter and the December 31st, 2021.

Good afternoon, and thank you for joining us on today's conference call to discuss Enphase Energy's fourth quarter 2021, ourself on today's call are projects under Aman, <unk>, President and Chief Executive Officer, Eric <unk>, Chief Financial Officer, Mandy Yang Chief Accounting Officer, and corporate Treasurer and might go below our chief product officer after.

The market close today and issued a press release announcing the results for its fourth quarter ended December 31 2021.

Speaker 2: During this conference call, NFACE management will make forward-looking statements, including but not limited to statements related to NFACE energy's expected future financial performance, the capability of our technology and products, including features, performance in our operations, including manufacturing and customer service, the anticipated growth in our sales and in the markets in which we operate and target, the benefits to homeowners and installers, and regulatory issues.

During this conference call Enphase management will make forward looking statements, including but not limited to statements related to Enphase Energy's expected future financial performance the capability of our technology and products, including features performance in our operations, including manufacturing and customer service the anticipated growth in our sales and in the markets in which we operate and target the benefit.

To homeowners and installers and regulatory issues. These forward looking statements involve significant risks and uncertainties and Enphase Energy's actual results and timing of events could differ materially from these expectations for a more complete discussion of the risks and uncertainties. Please see the company's annual report on Form 10-K for the year ended December 31 2000.

Speaker 2: These forward-looking statements involve significant risks and uncertainties and enthase energies actual results, and the timing of events could defer materially from these expectations.

Speaker 2: For a more complete discussion of the risks and uncertainties, please see the company's annual report on Form 10K for the year ended December 31st, 2020, which is on file with the SEC, and annual report on Form 10K for the year ends December 31st, 2021, which will be filed with the SEC in the first quarter of 2022.

<unk> 20, which is on file with the SEC and annual report on Form 10-K for the year ended December 31, 2021, which will be filed with the SEC in first quarter of 2022 and.

Speaker 2: and save energy costions you not to place any undue reliance on forward looking statements and undertakes no duty or obligation to update any forward looking statements as a result of new information, future events, or changes in expectation.

Enphase energy cautions you not to place any undue reliance on forward looking statements and undertakes no duty or obligation to update any forward looking statements as a result of new information future events or changes in expectations.

Speaker 2: Also, please note that financial measures used on this call are expressed on a non-gat basis unless otherwise noted and have been adjusted to exclude certain charges. The company has provided a reconciliation of these non-gat financial measures to GAAP financial measures in its earnings release posted today, which can also be found in the investor relations section of its website. Now, I'd like to introduce Fadry Kassandaraman, President and Chief Executive Officer of NSA's Energy. Fadry.

Also please note that financial measures used on this call are expressed on a non-GAAP basis, unless otherwise noted and have been adjusted to exclude certain charges. The company has provided a reconciliation of these non-GAAP financial measures to GAAP financial measures in its earnings release posted today, which can also be found in the Investor Relations section of its website now I'd like to introduce <unk>.

Patrick the Thunder, Amon, President and Chief Executive Officer of Enphase Energy Andre.

Speaker 3: Good afternoon and thanks for joining us today to discuss our fourth quarter 2021 financial results.

Good afternoon, and thanks for joining us today to discuss our fourth quarter of 2021 financial results.

Speaker 3: We had a good quarter. We reported revenue of $412.7 million, shipped approximately three million microinverters, and 100.2 megawatt hours.

We had a good quarter.

We reported revenue of $412 7 million shipped approximately $3 million micro inverters.

102 megawatt hours of IQ batteries.

Speaker 3: achieved non-gap gross margin of 40.2% and generated free cash flow of $84.1 million.

Achieved non-GAAP gross margin of 42% and generated free cash flow of $84 1 million.

Speaker 3: We started production shipments of RIQ8 microinverters for customers in North America during Q4 and we have been very pleased with customer feedback so far.

We started production shipments of our IQ eight micro inverters for customers in North America. During Q4, and we have been very pleased with customer feedback so far.

Speaker 3: We exited the fourth quarter at approximately 40, 17, 24. This means 40% gross margin, 17% operating expenses, and 24% operating income, all as a percentage of revenue on a non-gap basis. As a reminder, our baseline financial model is 35, 15, 20. We will go into detail about our financials later in the call. Let's now discuss how we are...

We exited the fourth quarter at approximately $40 <unk> 24.

Means 40% gross margin, 17% operating expenses and 24% operating income all as a percentage of revenue on a non-GAAP basis. As a reminder, our baseline financial model is $35 $15 20, we will go into detail about our financials later in the call.

Let's now discuss how we are servicing customers.

Speaker 3: Our Q4NPS worldwide was 69% compared to 67% in Q3. Our North American NPS was 73% compared to 71% in Q3.

Q4, NPS worldwide was 69% compared to 67% in Q3.

Our North American NPS was 73% compared to 71% in Q3.

Speaker 3: Our average call weight time increased to 8.9 minutes in Q4 compared to 5.5 minutes in Q3 as we onboarded new installers and fielded more calls on our batteries. The ramp of our batteries has significantly increased call volumes as new installers learn how to commission the system and home owners learn about the system's features.

Our average call wait time increase 289 minutes in Q4 compared to $5 five minutes in Q3 as we on boarded.

Installers and feel that more calls on our batteries the ramp of our batteries and significantly increased call volumes as new installers loan out the commission the system and homeowners learn about the systems features we are not happy about the higher rate time, and we are working on it to reduce it under a minute through staffing and training.

Speaker 3: We are not happy about the highway time and we are working on it to reduce it under a minute through staffing and training.

Speaker 3: During Q4, we also increase the number of field service technicians in the US and Europe to provide on-site help to our installers, particularly on batteries.

During Q4, we also increased the number of field service technicians in the U S and Europe to provide onsite helped or installers, particularly on batteries.

Talk about manufacturing.

Speaker 3: Our operations team did a great job flexing manufacturing as 2021 plays out. As we have discussed in the past earnings call.

Our operations team did a great job flexing manufacturing as 2021 played out as.

As we have discussed in the past earnings call.

Speaker 3: The global supply chain situation, the global supply chain is still under a little bit of stress, but our situation has been stable, primarily due to diligent supplier management and qualification of alternates suppliers during the past year. Our supply of AC Fed drivers is at a very healthy level and we have five sources for AC Fed drivers.

The global supply chain situation, the global supply chain is still under a little bit of stress, but our situation has been stable primarily due to diligent supplier management and qualification of alternate suppliers during the past year, our supply of AUC fed drivers is at a very healthy level.

And we have.

<unk> sources for AC fed drivers for Asics used in our micro and orders our supply was quite healthy in Q4, and we continue to manage it closely as we ramp.

Speaker 3: For ASICs used in our microinverters, our supply was quite healthy in Q4. And we continue to manage it closely, as we ran IQ 8. And we have two phone resources for our ASICs.

And we have two foundries sources for our ethics.

Speaker 3: With the growing demand for our microinvotors, we remain vigilant regarding the global supply chain and logic.

With the growing demand for our micro and mergers we remain vigilant regarding the global supply chain and logistics.

Speaker 3: Given our strong demand, we added a fully automated line in Q4, bringing quarterly capacity to 2.25 million microinverters in Mexico.

Given our strong demand we added a fully automated line in Q4, bringing quarterly capacity to two to 5 million micro Inverters in Mexico.

Speaker 3: We had already added a second fully automated line earlier in 2021 at our contract manufacturer, Sal Combin India, bringing that quarterly capacity to about 1.5 million micro-invote.

We had already added a second fully automated line earlier in 2021 at our contract manufacturer <unk> comp in India, bringing that quarterly capacity to about one 5 million micro and workers.

Speaker 3: Along with our existing capacity in China, we can now do a little more than 5 million microinverters per quarter in total for all microinverters worldwide.

Along with our existing capacity in China, we can now do a little more than 5 million micro inverters for the quarter in total for all micro Inverters worldwide.

Speaker 3: We're also planning to add a contract manufacturing facility for microinverters in Europe by the end of this year. We see rapid growth in the region and would like to service customers better.

We are also planning to add a contract manufacturing facility for micro Inverters in Europe by the end of this year, we see rapid growth in the region and we would like to service customers better.

Let's now talk about batteries.

Speaker 3: Our two sources for battery cell packs have increased their capacity to 180 MW per quarter from 120. Our existing cell pack suppliers are capable of adding even more capacity if needed. And we are continuing discussions with additional cell packs suppliers as well.

Our two sources.

Battery cell packs of increase that capacity to 180 megawatt hours a quarter from $1 20, our existing self back suppliers are capable of adding even more capacity if needed and we are continuing discussions with additional sterile pack suppliers as well.

Speaker 3: As always, there are a few components that we are managing to ensure we don't have a supply disrupt.

As always that in a few components that we're managing to ensure we don't have a supply disruption.

Speaker 3: There is never a dull day for our operations team in these times.

That is never a dull day for our operations team in these times.

Speaker 3: Our lead times for batteries are still long today at approximately 14 to 16 weeks, primarily due to logistics challenges, which are global.

Our lead times for batteries are still long today at approximately 14% to 16 weeks, primarily due to logistics challenges which are global.

Speaker 3: The lead times should come down once global shipping and port congestion conditions improve.

<unk> should come down once global shipping and port condition conditions improve.

Let's move on to the regions.

Speaker 3: Our US and international revenue mix for Q4 was 82 and 18% respect.

Our U S and international revenue mix for Q4 was 82 and 18% respectively.

Speaker 3: For 2021, we achieve record revenue across all regions with more than 78% growth around here.

For 2021, we achieved record revenue across all regions with more than 78% growth year on year.

Speaker 3: Our US and international revenue mix for the full year was 80% and 20% respect.

Our U S and international revenue mix for the full year was 80% 20% respectively.

Speaker 3: In the US, revenue increased 74% year-on-year. We reported record revenue and sell-through from our distribution partners to installers for both microinverters and batteries in Q4. Our microinverter channel inventory was at a healthy level at the end of Q4, but our storage channel inventory remained tight due to strong demand and logistics challenges.

In the U S revenue increased 74% year on year.

We reported record revenue and sell through from our distribution partners to installers for both micro Inverters and batteries in Q4.

Our micro Inverters to channel inventory was at a healthy level at the end of Q4.

Our total channel inventory remained tight due to strong demand and logistics challenges.

Speaker 3: We expect microinverter channel inventory to remain healthy in Q1 and storage channel inventory to improve.

We expect micro inverter channel inventory remained healthy in Q1 and storage channel inventory to improve.

Speaker 3: In Europe , Revenue More Than Double Lear on Year. I am very pleased with our team's performance and excited about the growth in 2020.

In Europe revenue more than doubled year on year.

I am very pleased with our team's performance and excited about the growth in 2022.

Speaker 3: During 2021, we expanded into Italy with solar microinverters and introduced batteries in Germany and Belgium.

During 2021 we expanded into Italy, with solar micro Inverters and introduced batteries in Germany and Belgium.

Speaker 3: We do plan to introduce batteries in other countries in Europe steadily throughout 2022.

We do plan to introduce batteries and other countries in Europe steadily throughout 2022.

Speaker 3: In Asia Pacific region, revenue increased 80% year-on-year. Adding into 2022, we look to capitalize on the industries recovery from COVID restrictions, as well as recent regulatory changes that are favorable to our software defined ACR.

In the Asia Pacific region revenue increased 80% year on year.

Heading into 2020, do we look to capitalize on the industry's recovery from Covid restrictions as well as recent regulatory changes that are favorable to our software defined AC architecture.

Speaker 3: and plan to introduce batteries in Australia in the second half of 2020.

We plan to introduce batteries in Australia in the second half of 2022.

Speaker 3: In Latin America, revenue increased 77% year-on-year. We remain quite bullish about our solar plus storage business in Puerto Rico and expect steady growth there in the next few quarter.

In Latin America revenue increased 77% year on year, we remain quite bullish about our solar plus storage business in Puerto Rico, and I expect steady growth there in the next few quarters.

Speaker 3: We're also very pleased with the progress we are making in Brazil as we started ramping IQ 7 plus microinverters to installers in Q4.

We're also very pleased with the progress we are making in Brazil, as we started ramping IQ seven plus micro inverters to installers in Q4.

Speaker 3: Now that we covered all the regions, let's discuss the overall bookings for Q1.

Now that we covered all of the regions lets discuss the overall bookings for Q1.

Speaker 3: Our overall customer demand for Q1 is quite robust for both microinverters and batteries and exceeds the higher end of our guidance ring.

Our overall customer demand for Q1 is quite robust for both micro inverters and batteries and exceed the higher end of our guidance range.

Speaker 3: The component availability is certainly better than what we experienced last year. We are primarily left with logistics challenges which are global in general and not very specific to end phase. We are quite optimistic that our supply will catch up to demand during the year.

Component availability is certainly better than what we experienced.

Last year, we are primarily left with logistics challenges, which are global in general and not very specific to end phase where quite often we are quite optimistic that supply will catch up to demand during the year.

Speaker 3: Let's talk about our storage systems. We shipped 100.2 megawatt hours of IQ batteries, which was a significant 53% increase from Q3.

Let's talk about our storage systems, we shipped 102 megawatt hours of ICU batteries, which was a significant 53% increase from Q3.

Speaker 3: As I mentioned, our least times are a little long at around 14 to 16 weeks, mainly due to logistic challenges.

As I mentioned, our lead times are living longer at around 14 to 16 weeks, mainly due to logistics challenges. We expect to ship between 110 120 megawatt hours of batteries in Q1. This represents a 15% growth from Q4.

Speaker 3: We expect a ship between 110 and 120 megawatt hours of batteries into one. This represents a 15% growth from Q4.

Speaker 3: Due to the increase in logistics, cost-rich or significant, and increase in component cost driven by inflation, we are implementing a modest price increase on our batteries beginning March of 2022.

Due to the increase in logistics costs, which are significant and increase in component costs driven by inflation. We are implementing a modest price increase on our batteries beginning March of 2022.

Let's talk about installer training them better.

Speaker 3: By the end of Q4, we trained approximately 4,845 installer personnel representing approximately 2000 plus 2000 plus installation company.

By the end of Q4, we trained approximately 4845 installer personnel, representing approximately 2000, plus 2000 plus installation companies.

Speaker 3: Our hands on storage training continue through the use of mobile bands and regional training centers in the fourth quarter.

Our hands on storage training continue through the use of mobile vans and regional training centers in the fourth quarter.

Speaker 3: We are continuing to work on commissioning times for installers while adding features such as load control and generator compatibility to our battery.

We are continuing to work on commissioning times for installers, while adding features such as load control and generator compatibility of batteries.

Speaker 3: We expect to introduce batteries in North America and Australia with a modularity of 5 kilowatt-hour and double the continuous and peak power in the second half of 2020.

We expect to introduce batteries in North America, and Australia with the modularity of five kilowatt hour and double the continuous and peak power in the second half of 2022.

Speaker 3: We believe this will not only enhance the customer experience significantly, it will also bring down the cost.

We believe this will not only enhance the customer experience significantly it will also bring down the cost.

Let's talk about new products.

Speaker 3: started production shipments, the IQ 8 microinverters for customers in North America and Q4, lift your foot.

We started production shipments of IQ eight micro inverters for customers in North America in Q4 last year.

Speaker 3: The IQV fundamentally changes the paradigm for solar technology, which otherwise requires a grid connection to operate. IQV can form a microgrid during a power outage, using only sunlight, providing backup power, even without a battery. For homeowners who want a battery, there are no sizing restrictions and pairing an N-phase battery with an IQV-8 solar system.

The IQ eight fundamentally changes the paradigm for solar technology, which otherwise required a grid connection to offering IQ eight can farm a micro grid during a power outage using only sunlight, providing backup power even without a battery for homeowners, who want a battery that have no sizing restrictions and pairing an enphase.

Battery with an IQ eight solar system.

Speaker 3: We also expect to introduce IQ 8 microinvaders internationally in the second half of 2022.

We also expect to introduce IQ eight micro inverters internationally in the second half of 2020.

Speaker 3: Let's now talk about the IQ-AID full system for small commercial solar application.

Let's now talk about the IQ eight the full system for small commercial solar application.

Speaker 3: We have achieved compliance on the 640 WADA AC microinverter for North America, and we are now focused on getting the full system and installer platform ready. We expect pilot shipments of the full system to select installers in this quarter Q1 with volume shipments beginning in Q2.

We have achieved compliance on the 640 Watt AC micro inverter for North America, and we are now focused on getting the full system and install a platform ready.

We expect pilot shipments of the full system to select installers in this quarter Q1 with volume shipments beginning in Q2.

Speaker 3: Let's go to Clipper Creek and acquisition we completed in Q4. Clipper Creek offers EV charging solutions for residential and commercial customers in the US.

Let's go to Cripple Creek and acquisition, we completed in Q4.

<unk> Creek offers EV charging solutions for residential and commercial customers in the U S.

Speaker 3: There have been a pioneer in the EV charging market since 2006, and I've sold more than 110,000 level two charging stations, AC charging stations since inception.

They have been a pioneer in the EV charging market since 2006 and absorbed more than 110000 level two charging stations AC charging stations since inception the.

Speaker 3: The business is very healthy and the gross margins are in line with

The business is very healthy and the gross margins are in line with Enphase.

Speaker 3: a clipper creek brand as a reputation for quality, high quality and great service, which we like a lot.

The flipside of peak brand has a reputation for quality high quality and great service, which we like a lot.

Let me outline our plans for Chipotle.

Speaker 3: We plan to transfer manufacturing to our contract manufacturing facility in Mexico by the end of this year so that we can rapidly scale the business and support demand.

We plan to transfer manufacturing to a contract manufacturing facility in Mexico by the end of this year. So that we can rapidly scale the business and support demand.

Speaker 3: We're also looking forward to introducing the products imminently to distribution and installation partners in the US.

We are also looking forward to introducing the products imminently to distribution and installation partners in the U S.

Speaker 3: In addition, we plan to introduce connectivity in every charger will be shipping to enable smart EV charging with the NFays app. This will enable charging on a schedule, carifactimization, and charging with green electrons from an NFays solar plus storage home energy system.

In addition, we plan to introduce connectivity in every charges will be shipping to enable smart EV charging with the enphase that this will enable charging on a schedule that if optimization and charging with green electrons from an enphase solar plus storage home energy system for.

Speaker 3: For the long term, we plan to work on bidirectional charging and grid service integration for vehicle to home and vehicle to grid applications.

For the long term, we plan to work on bidirectional charging and bridge services integration for vehicles to home and very easy to grid applications.

Let me go to great services.

Speaker 3: In December , we announced our participation in Arizona Public Service, APS, the residential battery grid services program. The program offers homeowners to install NFAs batteries. In APS is territory that chance to participate and earn money through one time upfront incentives. We believe this new program from APS will help accelerate the adoption of NFAs systems in Arizona.

In December we announced our participation in Arizona Public service Aps residential battery grade services program.

The program offers homeowners, who install enphase back enphase batteries, and Aps's territory, the chance to participate and earn money through onetime upfront incentives. We believe this new program from Aps will help accelerate the adoption of Enphase systems in Arizona.

Speaker 3: We have previously discussed our participation in the Connected Solutions program and Hawaiian Electric Battery Bonus Bridge Services programs. As a reminder, Connected Solutions is an incentive program implemented by three utilities in Connected Kids, Massachusetts and Rhode Island to reduce electrical demand during high-use periods.

We have previously discussed our participation in the connected solutions program in Hawaiian Electric battery bonus Blake services programs. As a reminder, connected solutions is an incentive program implemented by three utilities and connected, Massachusetts, and Rhode Island to reduce electrical demand during high use periods.

Speaker 3: The Hawaiian Electric Battery Bonus Literature Vices Program offers incentive for homeowners on the island of Wahoo who install a new home battery.

The Hawaiian electric battery bonus Rich services program offers incentive for homeowners on the island of Oahu, who install a new home battery.

Speaker 3: We also have about a dozen new grid services engagement in the pipeline, and we look forward to working with more utilities and aggregators in the month ahead. Let's talk about...

We also have about a dozen new grid services engagements in the pipeline and we look forward to working with multi utilities and aggregators in the months ahead.

Let's talk about the installer of digital platform.

Speaker 3: We are working to release solar grasp Pro, laser the squatter to improve the installer experience with an all-in-one solar and storage design and proposal tool that incorporates shading analysis, the ability to detect obstructions on the roof and 3D modeling of homes are driven by AI.

We are working to release solar graph growth later this quarter to improve the installer experience with an all in one solar and storage design and proposal tool that incorporates shading analysis, the ability to detect abstractions on the roof and three D modeling of homes are.

Driven by AI.

Speaker 3: The product is currently being piloted by key installers.

The product is currently being piloted by key installers.

Speaker 3: Yeah, some of our top installers and will be released later this quarter.

Yes, some of our top installers and will be released later this quarter.

Speaker 3: The former solar business of DIN engineering, now MFACE NIDA, provides proposal and permitting services.

The fundamental solar business <unk> engineering now Enphase nidal.

<unk> proposal and permitting services there.

Speaker 3: There we have added significant resources to accelerate automation and we expect to offer enhanced permitting services in the second half of...

There we have added significant resources to accelerate automation and we expect to offer enhanced permitting services in the second half of the year.

Speaker 3: As part of our efforts to further strengthen the installer digital platform, we acquired 365 pronto in Q4. The company offers the predictive software platform dedicated to simplifying maintenance by matching clean tech asset owners to a local and on-demand workforce of service providers.

As part of our efforts to further strengthen the installer digital platform. We acquired 365 Pronto in Q4 the company offers a predictive.

Software platform dedicated to simplifying maintenance by matching clean tech asset owners to our local and on demand workforce of service providers.

Speaker 3: software platform will provide our installers the ability to service their own ONM content.

The software platform will provide our installers the ability to service their own O&M contract.

Speaker 3: Let me now give you an update on our N-Face Installer Network, or EIN. We have now onboarded approximately 1,130 installers to our EIN worldwide through a highly selective process focused on installation quality and an exceptional home owner experience.

Let me now give you an update on our Enphase installer network.

We have now on boarded approximately 1130 <unk>.

Installers to our EAN worldwide through a highly selective process focused on installation quality.

And an exceptional homeowner experience.

Speaker 3: I would like to comment on the California NEMS-3 proposed decision or PD, which was announced originally in December .

Next.

I would like to comment on the California, Mems III proposed decision or PD, which was announced originally in December .

Speaker 3: In our opinion, the PD in its current form unfairly penalizes solar only system by imposing fixed charges significantly reducing export compensation.

In our opinion the PD in its current form unfairly penalizes solar only system by imposing fixed charges significantly reducing export compensation.

Speaker 3: and retroactively changing the length of the original NEM contract.

And retroactively changing the length of the original NEM contract.

Speaker 3: The PD was meant to encourage the transition from solar only to solar plus storage. While we believe this transition is a correct long-term goal to meet California's energy targets, storage is not yet fully mature for 100% attached in terms of cost, in terms of supply, in terms of permitting, warranty and training.

<unk> was meant to encourage the transition from solar only solar plus storage.

While we believe this transition is the correct long term goal to meet California's energy target storage is not yet fully mature for 100% attach in terms of cost in terms of supply terms of permitting warranty and training we would.

Speaker 3: We would like to see a modified PD where the fixed charges are removed, the original length of the existing Mem Contracts are restored, and a multi-year glide path is established to gradually reduce the export compensation.

Like to see a modified ped.

Fixed charges are removed the original length of the existing <unk> contracts are restored and our multi year glide path is established to gradually reduce the export compensation.

Speaker 3: We are working diligently with various stakeholders to try and influence a better outcome in order to eliminate any market disruptions and create a win-win for all rate payers and utilities.

We are working diligently with various stakeholders to try and influence a better outcome in order to eliminate any market disruptions and create a win win for all rate payers and utility.

Speaker 3: In summary, we are pleased with our overall performance. As a reminder, our strategy is to build best in-class home energy systems and deliver them to home owners through our installation and distribution partners enabled by an installer digital platform.

In summary, we are pleased with our overall performance as a reminder, our strategy is to build best in class energy systems.

And delivered them to homeowners through our installation and distribution partners enabled by an installer digital platform.

Speaker 3: With our recent acquisitions, we are now able to offer more complete home energy systems to our partners comprising of solar batteries, grid services, load control, EV chargers, and even compatibility with most third party generators.

With our recent acquisitions, we are now able to offer more complete home energy systems to our partners comprising of solar batteries direct services load control EV Chargers and even compatibility with most third party generators.

Speaker 3: We can also now offer design and proposal software, permitting services, installation and commissioning software, fleet management and monitoring software, and finally, O&M services for our installers through the digital platform. I would like to thank our employees for their hard work towards your strategy and continued dedication to advancing the sustainable future for all.

You can also now offer design and proposal software.

<unk> services installation and commissioning software fleet management and monitoring software and finally O&M services for our installers through the digital platform I would like to thank our employees for their hard work towards <unk>.

Strategy and continued dedication to advancing a sustainable future for all.

Speaker 3: Before I turn the call over to discuss our financials, I want to inform you that Eric is retiring from NFAs. His last day at NFAs will be February ...

Before I turn the call over to discuss our financials I want to inform you that Eric is retiring from Memphis. His last day at Enphase will be February 14th he has been a great partner to me over the last three and a half years and his financial leadership helped drive a sustained profitability and shareholder value.

Speaker 3: He has been a great partner to me over the last three and a half years.

Speaker 3: And the financial leadership, self-drive, are sustained profitability and shareholder value.

Speaker 3: We would like to thank him for the service and wish him well as he takes time to spend with his family. I'm pleased to announce that Mandy Yang, our chief accounting officer and corporate treasurer, has accepted the role of CFO , effective February 15th. With Mandy as our CFO , we will have a seamless transition as we continue to deliver growth and operational excellence.

We would like to thank him for his service and wish him well as he takes time to spend with his family I am pleased to announce that mainly Yang our chief accounting officer, and corporate Treasurer and has accepted the role of CFO effective February 15th with mainly as our CFO , we will have a seamless transition.

We continue to deliver growth and operational excellence.

Speaker 3: Eric will be in an advisory capacity with an face through June 30th to assist with this transition.

And again it will be enough yeah in an advisory capacity with we then phase through June 30 to assist with this transition.

Speaker 3: With that, I will hand the call over to Eric for his review of our financial results. Eric.

With that.

I will hand, the call over to Eric for his review of our financial results.

Speaker 4: Thanks, brother and good afternoon everyone. I would like to convey my deep gratitude for my experience at MFACE. I have had the pleasure to work with not only a very talented executive.

Thanks, Bob and good afternoon, everyone I would like to convey my deep gratitude for my experience I Didnt face I have had the pleasure to work with not only a very talented executive team and also a remarkable group of professionals, who have shown such a hard work and dedication to the company I want.

Speaker 4: and also remarkable group of professionals who have such a hard work and education to the company. I want to especially thank Badrini for his partnership and leadership in driving M5F6.

Specialties tank batteries for his partnership and leadership in driving success.

Speaker 4: I plan to remain a short holder and I wish the company continues.

I plan to remain a shareholder and I wish the company continued success.

Speaker 4: I will provide more details related to our fourth quarter of 2021 financial results and hand over the code over to Mandy to provide our business outlook for the first quarter of 2020.

I will provide more details related to our fourth quarter of 2021 financial results and hand over the call over to <unk> to provide our business outlook for the first quarter of 2022.

Speaker 4: We have provided a reconciliation of these non-gap to GAAP financial measures in our earnings release both today, which can also be found in the IR section of our website.

We have provided a reconciliation of these non-GAAP to GAAP financial measures in our earnings release posted today, which can also be found in the IR section of our website.

Speaker 4: Dollar revenue for Q4 was $412.7 million represented in Injiliso 17% sequentially and quarterly records.

Total revenue for Q4 was $412 7 million represented an increase of 17% sequentially and a quarterly record.

Speaker 4: We shipped approximately 182 MW DC of microin better than 100.2 MW of IQ batteries in the quarter.

We shipped approximately 1082 megawatts DC of microphone burners on 102 megawatt hours of IQ priorities in the quarter.

Speaker 4: Nungap cross margin for Q4 was 40.2% compared to 40.8% in Q3. Nungap cross margin was impact.

non-GAAP gross margin for Q4 was 42% compared to 48% in Q3.

non-GAAP gross margin was impacted by product mix.

Speaker 4: Gapcross margin worth 39.6% for Q4.

GAAP gross margin was 39, 6% for Q4.

Speaker 4: Nonga Puparei in expenses were $68.2 million for Q4 compared to $57.3 million for Q3. The sequential increase was primarily due to increase investment in product launches, R&D, and IT infrastructure.

non-GAAP operating expenses were $68 2 million for Q4 compared to 57 3 million for Q3. The sequential increase was primarily due to increased investment in product launches.

R&D and IP.

The infrastructure sector.

Speaker 4: gap operating expenses were 105.6 million dollars for Q4 compared to 13 million dollars for Q4.

GAAP operating expenses were $105 6 million for Q4 compared to one 3 million for Q3.

Speaker 4: In Gapotering expenses for Q4, included $35 million of the stock-based compensation expenses and $2.7 million of acquisition related expenses and a mortization for acquiring tangible

GAAP operating expenses for Q4 included $35 million of our stock based compensation expenses and $2 $7 million of acquisition related expenses and amortization for acquired intangible assets.

Speaker 4: When a non-gap basis in confirm operations for Q4 was $97.7 million compared to $85.9 million for Q3. On a gap basis in confirm operations was $57.7 million for Q4 compared to $37.4 million for Q4.

On a non-GAAP basis income from operations for Q4 was $97 7 million.

Compared to $85 9 million for Q3 on a GAAP basis income from operations was $57 7 million for Q4 compared to $37 4 million for Q3.

Speaker 4: On a non-gap basis, made in Comfort Q4 was $102.8 million compared to $84.2 million for Q.

On a non-GAAP basis net income for Q4 was $102 $8 million compared to $84 2 million for Q3.

Speaker 4: This resulted in non-gap diluted earnings per share of 73 cents for Q4 compared to 60 cents per share for Q3.

This resulted in non-GAAP diluted earnings per share of 73 for Q4 compared to <unk> 60 per share for Q3.

Speaker 4: Gap net income for Q4 was $52.6 million compared to Gap net income of $21.8 million for Q3. Gap deluded earnings per share was $37.4 for Q4 compared to deluded earnings per share of 15 cents for Q4.

GAAP net income for Q4 was $52 6 million compared to GAAP net income of $21 8 million for Q3 GAAP diluted earnings per share were <unk> 37 for Q4 compared to diluted earnings per share of <unk> 16 cents for Q3.

Speaker 4: We exceeded Q4 with a total cash equivalence and marketable securities balance of approximately $1 billion compared to approximately $1.4 billion at the end of Q3. We've repurchased our common stock for a total amount of $300 million on the open market in December 2021.

We exited Q4 with a total cash cash equivalents and marketable securities balance of approximately $1 billion compared to approximately $1 4 billion at the end of Q3.

We repurchased our common stock for a total amount of $300 million in on the open market in December 2021.

Speaker 4: We previously announced $500 million share report of the station. Together with the $200 million of share by back in May 2021, we report approximately $3.2 million shares in 2021 for a total $500 million with an average price of $155 per share.

Against our previously announced $500 million share repurchase authorisation together with the $200 million of share buyback in May 2021, we repurchased approximately three 2 million shares in 2021 portfolio of $500 million with an average price of $155.

Sure.

Speaker 4: This represents approximately 2.4% of our outstanding shares. In Q4, we generated $97.2 million in cash flow from operations and $84.1 million in free cash flow. For the year 2021, we generated a record of $315.5 million of free cash flow.

This represents approximately two 4% of our outstanding shares in Q4, we generated $97 $2 million in cash flow from operations and $84 $1 million in free cash flow for the year 2021, we generated a record $315 $5 million of free cash flow.

Speaker 4: Capital expenditure was 13.2 million dollars for Q4 to expand both micro-inverter and storage manufacturing capacity as well as cost related to new product development.

Capital expenditure was $13 2 million for Q4 to expand both micro and better than historical manufacturing capacity as well as costs related to new product development.

Speaker 4: I will now hand over the call to Mandy to discuss our Q1 out.

I will now handover the call to Monday to discuss our Q1 outlook.

Speaker 4: There is no greater joy for me to see here accepting this role of the CFO and face. I cannot think of anyone more capable or with higher integrity to take on the challenges of this function. As the company continues to grow both organically and in complex

There is no greater joy for me to see him accepting this role as the CFO from phase I cannot think of any one more capable or with higher integrity to take on the challenges of this function as a comp as the company continues to grow both organically and in complexity Mondays are remarkable professional.

Speaker 4: Mandi is a remarkable professional with the right combination of finance and accounting technical skills, coupled with a proven track record of building large global finance.

With the right combination of finance and accounting technical skills, coupled with a proven track record of building large global finance team.

Speaker 4: And her leadership, she will take his dysfunction to an even higher level of effect.

Under her leadership she will take this function to an even higher level of excellence, mainly has been chief accounting officer, and corporate Tricia Reprising faced over the past three and a half years and has done an outstanding job, leading the controllers shipped finance operations internal audit and control treasury and tax functions often face.

Speaker 4: Mandi has been chief accounting officer and corporate treasurer of item phase for the past three and a half years and has done an outstanding job leading the control sheet final operations in turn all over the controlled treasurer and tax functions of him.

Speaker 4: With this transition to hair at the new CFO , we will not miss a bit, and I am very pleased she has accepted this new role. Monday.

With this transition to her as our new CFO , we will not Miss a beat and I am very pleased she has accepted this new role.

Speaker 5: Thanks Eric. It's important for me to work with Eric at NCAS. Under his leadership, we have built an exceptional finance team and I look forward to building underfun.

<unk>.

Thanks, Eric and congrats from me to work with Eric.

And that his leadership, we have built an exceptional finance team and I look forward with building on that foundation.

Speaker 5: So it's a revenue for the first quarter of 2022 to be within a range of $420-440 million, which includes shipments of $110-120 megawatt hours of IQ better.

Revenue for the first quarter of plenty plenty to be within a range of 122 $440 million, which increased shipments of 110 to 120 megawatt hours.

Speaker 5: take a course margin to be within a range of 37 to 40

Database.

We expect GAAP gross margin to be within a range of 37% to 40% and non-GAAP gross margin to be within a range of 38% to 41%, which excludes stock based compensation expenses and acquisition related amortization.

Speaker 5: And Namget gross margin to be within a range of 38 to 41%. Which is whose start-based compensation expenses and acquisition related amatitis.

Speaker 5: We expect our gap operating expenses to be within a range of 130.5 to 133.5 million dollars, including a total of approximately 63 million dollars, estimated for start-based compensation expenses, and acquisition related expenses.

GAAP operating expenses to be within a range of 135 to $133 $5 million.

According to a total of approximately $63 million and for stock based compensation expenses and <unk>.

Acquisition related expenses.

Speaker 5: It is estimated that the best compensation expenses include approximately $12.3 million, a course for the UNO that are tied to a certain performance target to be paid in the company staff for the acquisition of Clipper Crypt and $365.3 million.

Thank you.

And that is that this compensation expense at <unk>.

Maybe $12 $3 million across all the earn outs are tied.

Tied to certain performance targets will be paying no companies that all of that.

Physicians, Cleveland Clinic, and 365, Tom Tom.

Speaker 5: They are non-get operating expenses to be within a range of 67.5 to 17.5 million dollars. With that, I will not open...

non-GAAP operating expenses they are within our range of $67 five.

$75 million.

With that I will now open the line for questions.

Speaker 8: Certainly ladies and gentlemen, you have a question at this time. Please press star then one. We'd like to ask you that you please limit yourself to one question and one follow-up you may get back into Q as time allows. Our first question comes from the line of Philipschen from Roth Capital Partners. Your question, please.

Certainly ladies and gentlemen, if you have a question at this time. Please press Star then one we'd like to ask you that you. Please limit yourself to one question and one follow up you may get back into queue. As time allows our first question comes from the line of Philip Shen from Roth Capital Partners. Your question. Please.

Speaker 6: Hi everyone, congrats on the strong quarter. Our checks suggest demand for the battery product.

<unk>.

Hi, everyone congrats on the strong quarter.

Our checks suggest demand for the battery park product is very strong even in the face of the two recent price hikes.

Speaker 6: very strong even in the face of the two recent price hikes.

Speaker 6: When do you expect your battery volumes to possibly hit a hundred eighty megawatt hours? And when could I, I, a third supplier or the capacity within the existing two suppliers being?

When do you expect your battery volumes to possibly hit 180 megawatt hours and one.

Third supplier or the capacity within the existing two suppliers be increased.

Speaker 3: Thank you Phil. We are very happy with our demand on batteries. So I'll give you some color on how we have done in the last year. First of all, our battery is AC-cooperate.

Thank you Phil.

We are very happy with our demand on batteries. So I'll give you some color on how we have done in the last year and our.

First of all our battery.

C Koppers.

It is modular.

Low voltage DC operation.

Speaker 3: uses lithium iron phosphate which is extremely safe chemistry. Air cooled.

Users lithium iron phosphate, which is extremely safe chemistry.

<unk> no.

No need of any fans.

Speaker 3: additionally we offer, you know, 15 year warranty, you know, no single point of failure.

Additionally, we offered a 15 year warranty.

No single point of failure.

Speaker 3: Through the last year we have offered load control, we have offered power start.

Through the through the last year, we have offered load control.

We have offered power start.

Generator compatibility.

Speaker 3: And all of those are bells and whistles that we have continuously had.

And all of those are the bells and whistles that we have continuously added.

Speaker 3: on top of our batteries, you know, the basic functionality. In addition, you know, the most important thing I'm proud of, we have...

On top of our batteries.

Basic functionality in addition.

The most important thing in products.

We have trained over 2000.

Installers.

Speaker 3: long tail installers. I've no secret that long tail installers is an easy and easy

Long tail installers.

Secret that long tail of installers and that is in phases bread and butter.

Speaker 3: installation companies

We have trained 2000, plus installers installation companies.

Speaker 3: And then out of that 2000, there is 1300 plus installers who are certified, which is...

And then out of that 2000.

1300, plus installers, who are certified.

Which is they have done an installation.

Speaker 3: They took the training, they did an installation and we certified.

They took the training data and installation and recertified.

Speaker 3: Extremely difficult to do. One installer at a time.

Extremely difficult to do one installer at a time.

Speaker 3: the last year and we believe that's the reason why our business is very strong and diversified. At the same time.

In the last year and we believe that's the reason why our business is very strong and diversified at the same time in the last year almost on a weekly basis, we have done weekly round tables without installers.

Speaker 3: In the last year, almost on a weekly basis, we have done weekly round tables with our

Speaker 3: where in every meeting we have 10 plus installers around and they are not afraid.

But every meeting we have 10 plus installers around.

And they are not afraid to talk about issues.

Speaker 3: And I'm not saying we are perfect. But what we promise installers is we take feedback, we work on it.

And I am not saying we are perfect.

But what we promise installers is we take feedback.

We work on it we improve our product.

Speaker 3: and we make your product better and better and better. That's why you saw us growing 53% from Q3 to Q4. And those are...

And we may yet.

Better and better and better.

That's why you saw us growing 53%.

From Q3 to Q4.

And those are nice numbers by the way.

Speaker 3: From a supply chain perspective, every quarter we are doing better on batteries, but it is no secret that

From a supply chain perspective every quarter, we are doing better.

On batteries, but it is no secret that.

The logistics challenges are global.

Speaker 3: And that's what is causing a 14 to 16 week lead time on batteries. When do I expect it to get better? I expect it to get better continuously throughout 2020.

And that's what.

As causing a 14 to 16 week lead time on batteries when do I expect it to get better than I expected to get better continuously throughout 2020.

Speaker 3: And it is global, nothing specific with MPs. Of course, we have pockets of shortages here and there, but our team has become excellent at navigating all of those.

And it is global nothing specific with NPS of course, we have.

Pockets of shortages here and there, but our team has become excellent at navigating all of those very well.

Speaker 3: So I expect continuous growth and batteries throughout the year. I'm not going to give you a number on when we will break the-

So I expect continuous growth in batteries throughout the year.

I'm not going to give you a number on when we will.

Break the 180 megawatt hour.

Speaker 3: And you know, if we break the 180 megabord our zone, our cell pack, you know, suppliers are willing to flex and they will take us to a little bit more.

And.

If we break the 180 megawatt hour zone, our setback in our suppliers are willing to flex and they will take us through a little bit more.

Speaker 3: So we are not worried about that too much. Right now we are focused on servicing customers properly, adding new installers and making sure we improve customer.

So we're not worried about that too much right now we are focused on servicing customers properly, adding new installers and making sure we improve customer experience.

Speaker 6: Great, thanks for that color battery. And in terms of my follow up, was wondering if you might be able to share where the margins on the storage product is or are today. And with the price increases, does that correspond? With the 7%, I think, expected for March 1st increased.

Great. Thanks for that color Roger.

And my follow up.

I was wondering if you might be able to share.

Where the margins on the storage product is.

Or today and.

With the price increases.

Does that correspond with the 7% I think you expected for March 1st increase.

Speaker 6: does that correspond directly to that margin and how do you expect that battery to be??

Does that correspond directly to that margin and how do you expect that battery margin to trend through 'twenty two.

Speaker 3: We're not breaking out the battery gross margin. The overall company gross margin was 40.2% in Q4. And I'll talk. I'll give you guys some general color and gross margins.

We're not breaking out the battery gross margin the overall company gross margin was.

42% in Q4 and talk and give you guys. Some general color on gross margins.

In the last year.

Speaker 3: the overall industry, almost all industries. I've seen a lot of component shortages and logistics. You know, problems.

The overall the overall industry almost all industries that have seen lot of component shortages and logistics.

<unk>.

Which is.

Speaker 3: From a component cost perspective, the cost of increased significantly.

From a component cost perspective, the cost of increased significantly.

Speaker 3: And the same thing on logistics, a container before which was $3,000. It's now $18,000. Six sex increase. So.

And the same thing on logistics that container before which are $3000.

It is now $18000 <unk> increase.

Speaker 3: So our cost of Ghana, but what our team has done is remarkable, which is both are microinvators and better.

Sure.

So our costs have gone up but what our team has done a remarkable which is both a micro inverters and batteries.

Speaker 3: We are able to still take costs out.

We are able to still take costs out.

Speaker 3: A couple of examples which I mentioned in the analyst day.

Yes, a couple of examples which I mentioned in the analyst day.

Speaker 3: was the bulkhead, the bulkhead on our microinverte. That's the project we've been talking about for some time. It is a painful learning for us, but it's a very important project because it helps us to remove when adapter cables shipped with the microinverte.

It was the bulk of it the bulk of it on a micro inverter. That's a project we've been talking about for some time. It is a painful learning for us, but it is very important project because it helps us to remove an adapter cables shipped with the micro inverters.

Speaker 3: And if we shift, I mean, if we remove the adapter cables, the cost of the micro-inverter obviously goes down. So with initiatives like that, our cost has actually gone down, but...

And if we ship I mean, if we remove the lab to the cable the cost of the micro inverter, obviously goes down so with initiators like that.

Cost has actually gone down but.

Speaker 3: because of the component shortages, the suppliers have raised cost, unless which is understandable, and due to inflation as well. So...

Because of the component shortages.

Suppliers have raised.

And as which is understandable and youll inflation as well so.

Speaker 3: in a similar on batteries. And batteries, the same dynamics with reference.

No.

Miller on batteries.

And batteries.

The same dynamics with with reference to suppliers what are we doing about it.

Speaker 3: You know, every day we work on the tactical stuff, you know, how can we optimize the how can we optimize the battery management circuit and then we are going to introduce

Every day, we work on the tactical stuff.

How can we optimize them closure, how can we how can we optimize.

The battery management Circuit, and then we are going to introduce.

Speaker 3: product in second half of 2022, where because we are going to increase the modularity a little bit from a 3.3 kilowatt hours to...

Our product in second half of 2022 Red.

Of course, we are going to increase the modularity a little bit from a from a three three kilowatt hour Stowe.

Speaker 3: 5 kilowatt hours we gain economies have failed it. So that's good to help us.

Five kilowatt hour as we gain economies of scale that so.

So that's going to help us.

Speaker 3: improve the cost on batteries, you know, come the second half of 2022 structure.

Improve the cost on batteries.

Come the second half of 2020 just structurally.

Speaker 3: In addition on top of that, I showed you in the analyst day that early 2023

In addition on top of that I showed you in the analyst day that early 2023.

Speaker 3: We have a radically new structure, at least for power conversion and battery management, where we integrate both.

<unk>.

Radically new structure.

At least for power conversion and battery management, where we integrate both.

Speaker 3: Power conversion and battery management into a single board. Both hardware and software.

Power conversion and battery management into a single board.

Both hardware and software unified.

Speaker 3: And then there's only one boat between the battery and AC line. You know, versus we have seven boats that we showed you in the analyst day. So we are...

And then there was only one board between the battery.

And AC line versus <unk>.

We have seven boats that we showed you in the analyst day. So we are.

Speaker 3: extremely excited by that product and that will help us to get even more clickdown on cars as customers expect, you know, the optimal pricing from us. So, you know, hopefully I gave you some color. So here, you know, you're quite confident of the gross margin trajectory and, you know, we're going to make a lot of progress soon.

Extremely excited by that product and that will help us to get even more click down on costs as customers expect.

The optimal pricing from us so I.

Hopefully that gave you some color and so we are.

You are quite confident of the gross margin trajectory and.

We're going to make a lot of progress soon.

Great. Thanks, Badri I'll pass it on.

Speaker 1: Thank you. Our next question comes from the line of J. B. Lowe from City. Your question, please.

Thank you. Our next question comes from the line of JP low from Citi. Your question. Please.

Speaker 7: I need one of you guys. The question was on 14 margins. I know that costs are increased.

Hey, good morning, guys.

My question was on <unk> margins.

No.

Costs are increasing.

But the margins.

Speaker 12: We're down due to mix. Can you just walk through what the product mix was and how it affected margins and poor Q? Like what I said, you know.

You said were down due to mix can you just walk through what the product mix was and how it affected margins in tortilla.

Well like what I said.

Speaker 3: You know, we are talking about a drop from 40.8% I think in Q3 to 40.2% first. It's kind of very small. We're talking about, we just broke it out saying that, you know, beyond storage, we basically exceeded the higher end of guidance. So, it was slightly depressed, but, you know, all the comments I just talked about on margin are true. And the margins have been, you know, understandably because of inflation. And big.

The product mix.

We are talking about a drop from 48% I think in Q3 to verify and 2%. So it's kind of very small we are talking about we just broke it out saying that.

Beyond storage, we basically exceeded the higher end of guidance so.

Slightly depressed, but all the comments I just talked about on margin.

True and the margins have been.

Understandably because of inflation.

And because of increase in component costs and.

Speaker 3: because we increase logistics which I point you know, there is always pressure on gross margins, but we are able to counter it. That's what we do. We have a world-class test force on both microinverters and batteries. We are not stopping to work on anything. We work on capacitors, we work on transformers, we work on semiconductors, we work on transistors, we work on parting.

And because of increased logistics, which I pointed out there is always pressure on gross margins, but we are able to counter that is what we do we have a world class cost taskforce on both micro Inverters and batteries, we are not starting to work on anything we work on capacitors. We work on Transformers, we work on semiconductors, we work on transistors, we work on party.

Speaker 3: And I told you the big stuff like the bulkhead, but we work on numerous things at the same time. So we don't distinguish between, you know, microinverters are batteries. We, the company continues to get healthier all the time. So when the component shortages go away, the supply chain constraints go away, the logistics constraints go away, then we'll have structurally better growth models.

<unk>.

And I told you the big stuff like the bulk of it but we work on numerous things at the same time.

Don't distinguish between micro Inverters and batteries, we the company continues to get healthier all the time so.

The component shortages go away the supply chain constraints go away.

The logistics constraints go away then we'll have structurally better gross margin.

Speaker 7: Great, great. And then on the one-cube guide,

Okay, Great and then on the <unk> guide.

Speaker 7: I just wonder if you could break down the growth that we're gonna see in top line one queue. If we break it down between volume improvement, and I know we're seeing volume improvement on the storage value of 15%. But I guess break it down between volume improvement on the micro side versus the pricing increases rolling through.

Just wondering if you could breakdown.

The growth that we're going to see in top line in <unk> can we break it down between volume improvement and I know, we're seeing volume improvement on the storage side of 15%.

But I guess break it down between volume improvement on the micro side versus pricing increases rolling through.

Speaker 3: Well, the pricing increase is only from March, so it's not going to be for the full quarter. I would say, in fact, a price increase is not going to be March.

Well the price increase is only from March so it's not going to be for the full quarter out the impact of pricing increase is not going to be much.

Speaker 3: In terms of microinverters, you all know that Q1 is seasonally down, but yet our business is not down. Battery is a 15% increase. So if you assume 600 to 700 or 600 to 800 dollars per kilowatt hour, it's a price range, you can calculate it yourself. So you can see that there is...

The in terms of.

In terms of micro Inverters you all know that that Q1 is seasonally down but yet relative business is not done.

In our battery is a 15% increase so if you if you assume 600 to 700 up 600 $800 per kilowatt hour.

Yes, the price range you can calculated yourself. So you can see that there is.

Speaker 3: Teddy growth on both businesses, both microinvaders and batteries.

Steady growth on both businesses, both micro inverters and batteries.

Okay, great. Thanks, Badri and congrats Eric.

Speaker 1: You are next question comes from the line of Brian Lee from Goldman Sachs. Your question please.

Thank you.

Our next question comes from the line of Brian Lee from Goldman Sachs. Your question. Please.

Speaker 1: Hey guys, thanks for taking the questions. Congratulations Eric on the retirement. You've always been one of my favorite CFOs. So you will be missed and look forward to working with you going for it, Mandy.

Hey, guys. Thanks for taking the questions and congratulations.

On the retirement, you've always been one of my favorite CFO . So you will be missed and look forward to working with you going forward.

Speaker 1: A couple questions, I guess. Just, there's a lot of moving parts here. So can you guys, I mean, the band's obviously great and then you're fixing all the supply chain issues from last year, but can you give us also a sense of?

Couple of questions I guess just.

There's a lot of moving parts here. So can you guys I mean demands obviously, great and you're fixing all the supply chain issues from last year, but can you give us also a sense of.

Speaker 1: I guess first on the Q1 Outlook, how much is Clipper Creek adding, and then can you talk about their margins, and what that does to your overall margin profile, and then what the price increase on the batteries, are you seeing or anticipating any demand pull forward in Q1 ahead of the price increase, is that embedded in the Outlook, just wondering if there's anything into Q1, we should be aware of, and then I'd follow up.

I guess first on the Q1 outlook.

How much is Clipper Creek, adding and then can you talk about their margins and what that does to your overall margin profile and then with the price increase on the batteries are you seeing or anticipating any demand pull forward. In Q1 ahead of the price increase is that embedded in the outlook just wondering if.

If theres anything into Q1, we should be aware of and then I had a follow up.

Speaker 3: Yeah, we're not, we're not breaking paper creek, you know, outright them.

Yes.

They're not breaking Cripple Creek.

Speaker 3: with regarding gross margins. I already said the gross margins of clipper creek are in line with MFA. So you can assume that.

Out right now.

With regarding gross margins.

<unk> said the gross margin uplift per creek are in line with them, but you can assume that.

Speaker 3: With reference to battery price increase, the price increases are beginning in March. So the contribution for Q1 is a little bit less. But do I think that will, you know, that will...

With reference to battery price increase.

These increases are beginning in March so the contribution for Q1.

Little bit less but do I think that will.

That will influence demand.

Yeah.

Speaker 3: I don't think so. It is fairly inelastic right now. Our backlog is quite high. The customers do understand we are taking care of them whenever we are able to. They know that we don't pass all of our cuts increase.

I don't think so it is fairly inelastic right now.

Our backlog is quite high the customers do understand we are taking care of them.

Whenever.

We are able to they know that we don't pass all of our cost increases we try to absorb them and we only pause or whatever.

Speaker 3: We try to absorb them and we only pass whatever we feel like we have to. And we are going to give them plenty of time and that's why it is effective in math. We give them plenty of time to adjust very transparent to them. So we are not worried about demand.

Feel like we have done so and we are going to give them plenty of time and that's why it is effective in March we gave them plenty of time to adjust very transparent to them.

So we are not worried about demand.

Speaker 1: Okay, that sounds great. So I just, as a follow-up to that battery, I know Q1 is seasonally a little bit weaker. You would anticipate battery demand and volumes, you know, kind of back to that.

Okay that sounds great. So I guess.

As a follow up to that Badri I know Q1 is seasonally a little bit weaker.

You would anticipate.

Battery demand and volumes kind of back to that.

Speaker 1: 30% sequential growth that you've been seeing outside of the slightly slower Q1, is that a fair assumption?

30% sequential growth that you've been seeing.

Outside of outside of the slightly slower Q1 is that a fair assumption.

Speaker 1: into to you and then uh... another kind of question around for for it is your Q1 outlook i don't think it does but uh... do you anticipate having any poor for demand from them three point or uncertainty in california and qon or or that something we might maybe see into q just wondering if you've either seen any of that or or your uh... forecasting to have some of that in the uh... in the next couple months here thanks guys

Two Q and then.

Another kind of question around pull forward is your Q1 outlook I don't think it does but.

Do you anticipate having any pull forward demand from them three point no uncertainty in California in Q1 or is that something we might maybe you see in <unk>, just wondering if you've either seen any of that or you're.

Forecasting to have some of that in the in the next couple of months here. Thanks, guys.

Speaker 3: So I'll give you some numbers for context. We grew 53% from Q3 to Q4.

Okay.

So I'll give you some numbers for context, we grew 53% from Q3 to give forward and.

Speaker 3: And a 15% growth from 100 is not too shabby.

And a 15% growth from 100 is not too shabby.

Speaker 3: That's our comment. As yes, we'd like to grow 30% but I already told you the comment on our lead time is 14 to 16 weeks. Our backlog is very strong. Our lead time is 14 to 16 weeks due to logistics. Logistics situation will ease up every quarter a little bit.

That's our comment as yes, we'd like to grow 30%, but I already told you the comment on our our lead time is 14% to 16 weeks. Our backlog is very strong. Our lead time is 14 to 16 weeks year to logistics the logistics situation will ease up every quarter a little bit so.

Speaker 3: We expect to continuously grow if it is, you know, whether it will be 30 percent.

So we expect to continuously grow if it is.

Yes, whether it will be 30%.

Speaker 3: or not I cannot make a comment on but we are very happy with our performance and better.

Not I cannot make a comment on but we are very happy with our performance on batteries.

Speaker 3: And Brian , the last portion of the question, can you please repeat so again? You know, answer.

And Brian the last portion of the question can you. Please repeat so I can answer.

Speaker 1: The battery just, you know, you're alluded to them 3.0 uncertainty and your opinion on what needs to change, but in terms of impact on your business.

Answer.

Badri just you alluded to NIM three no uncertainty in Europe opinion on what needs to change, but in terms of impact on your business.

Speaker 1: Are you actually seeing any demand up and forward in the state of California due to that uncertainty in your Q1 Outlook or is that something you maybe anticipate where it would start to sharpen Q2 if that uncertainty around them 3.0 continues to persist? Thank you. Yeah, if I were to see the situation before December and after December , I wouldn't say, you know, if I were to extrapolate to the situation, I would not say there has been a...

Are you actually seeing any demand pull.

Pull forward in the state of California, due to that uncertainty in your Q1 outlook or is that something you.

Maybe anticipate work would start to show up in Q2, if that uncertainty around <unk> three point out continues to persist.

If I were busy the situation before December anacrotism, but I wouldn't say.

If I were to extrapolate to the situation I would not say that as bina.

Speaker 3: And you know, I'm not sure if I can predict you to but

Pull through.

And.

I'm not I'm not sure if I can predict Q2, but.

Speaker 3: You saw that the PB decision is delayed. I don't know when the news schedule is, but that good news in general, I guess the installers are taking a breather right.

You saw the you saw that the PB decision is.

It's delayed I don't know when the new schedule is but thats good.

Good news agenda like guess the installers that are taking a breather right now.

Speaker 1: All right, thanks for the thanks for the call. Appreciate it, congrats Eric. Bye. Great.

Alright, thanks for the thanks for the color appreciate it congrats Eric Okay.

Speaker 8: that you are next question comes to the line of Julian Dumalit from Bank of America. Your question please.

Yes.

Thank you. Our next question comes from the line of Julien Dumoulin from Bank of America. Your question. Please.

Speaker 7: Hey good afternoon team, congratulations Eric Banny here. Let me start with an easy one and I'll follow up with a more complicated one here. Just on the share by-back. I just can you guys talk a little bit more to the top process and further authorization. Obviously an incredible year if you look past tense, prospectively looks like trends as you already articulate, look pretty robust, shares obviously reacting. How do you think about that? Further authorization.

Hey, good afternoon, Tim Congratulations Eric Manny here.

Let me start with an easy one and a follow up with a more complicated one here just on the share buyback just can you guys talk a little bit more to the thought process.

And further authorization, obviously incredible year, if you look past perspective, it looks like trends that you've already articulated look pretty robust shares obviously reacting how do you think about that and further authorization.

Speaker 3: Yeah, I mean, our general philosophy is anti-diaglusions.

Yes, I mean, our general philosophy is anti dilution. So we look at okay, saying, how do we compensate for that.

Speaker 3: So we look at, okay, saying how do we compensate for that?

Speaker 3: and we decided to share by back. So we first look at, do we have enough capital for this?

Uh huh.

We decided to do share buyback. So we first looked at.

Do we have enough capital for the needs of the business.

Speaker 3: The daily needs of the business, do we, if we want to invest in contract manufacturing lines, if we want to do something on batteries, do we have, do we have capital for that?

Daily needs of the business do we.

We want to invest in contract manufacturing lines. If we wanted to do something on batteries do we have do we have capital for that.

Speaker 3: That's what we see first. And then we basically look at, okay, are there any M and A's that are in the hopper where we can truly increase the value of the enterprise? So we'll look at that next.

That's that's what we see first.

And.

Then we basically look at okay are there any.

<unk> that are in the Hopper, where we can truly increase the value of the enterprise. So we look at that next.

Speaker 3: and we have, we evaluate a lot of companies every quarter. And then if we, we find we have enough for number one, we have enough for number two, then we go down to number three. And number three, what we say is,

And we have we evaluate a lot of companies every quarter and then if we find we have enough for number one we have enough for number two and we go down to number three and number three what we say.

Speaker 3: Am I confident that the share price today is below the conservative intrinsic value for the company? So I look at that.

Okay.

And my confidence that the share price today is below the conservative intrinsic value for the company.

So I look at that.

And then they make decisions.

Speaker 3: I may not get the lowest stop price.

It may not hit it I may not get the lowest stock price.

Speaker 3: know, lowest top price over a period. But I know I bought it because I consider the share the top price below the intrinsic value of the company. And that's a conservative value. So that's our top process. And so for this year, we did roughly over 3 million shares, which was about 2.4%.

Lower stock price over the period, but I know I bought it because I consider the shape. These tough price below the intrinsic value of the company and that we're conservative value. So that's our thought process and so far this year, we did we had roughly.

Over 3 million shares which was about two 4%.

It's a pretty healthy number.

Speaker 3: And you should expect that philosophy from us going forward. We still have about $200 million left.

And you should expect that philosophy from us going forward, we still have we still have about $200 million left out.

Speaker 3: out of the 500 million dollars authorized by the board and we will execute on it when we think the time is right.

Out of the $500 million authorized by the board and we will execute on it when we think the time is right.

Speaker 7: got it alright excellent and it just i want to revisit the storage conversation just a bit more it just to type a couple things that you said back mean given the the um... lead times that you described it conceivably you have his ability into you know well in the second quarter uh... is he is you start to think about that sixteen weeks out

Got it alright, excellent and then just I want to revisit the storage conversation just a bit more.

Just to tie a couple of things that you said back given the <unk>.

Lead times that you described I mean, conceivably you have visibility into well into the second quarter.

As you start to think about that 16 weeks out and what that means on your thought process. Here. I mean, you also said you're not going to comment on when you break that 180 megawatt hour threshold here, but can you elaborate a little bit more on on how you're thinking about the year shaping up on them, especially given the potential pull forward that could manifest once you get clarity on that.

Speaker 7: what that means on your thought process here. I mean, you also said you're not gonna comment on when you break that 180 megawatt hour threshold here, but can you elaborate a little bit more on how you're thinking about the year shaping up on them, especially given the potential before that could...

Speaker 7: manifest once you get clarity on that policy as well as Just the underlying demand. I mean as you've already alluded to and I've already been discussed I mean the man seems strong you've posted good numbers 4Q1Q You conceivably you've got some degree of visibility in the year. I mean maybe a little further parameters on how you're thinking about even stacking and and and

Honestly as well as just the underlying demand.

<unk> already alluded to and it has already been discussed when demand seems strong you've posted good numbers <unk>.

Conceivably you've got some.

Some degree of visibility into the year I mean, maybe it will further parameters on how youre thinking about even stacking.

Speaker 7: securing supply around what a number above 180 might look like as well.

Securing supply around what a what a number above 180 might look like as well.

Speaker 16: Yeah, I mean, just to tell you...

Yes.

Just just to tell you.

Speaker 3: You are right. The time is 14 to 16 weeks, so we have good visibility. Good visibility on the situation in Q2. And because now we have time for Q2, we are getting things right.

You are right lead time is 14 to 16 weeks. So we have good visibility.

Good visibility on the situation in Q2.

And because now we have time for Q2, we are getting things ready.

And like what I said, our business is very strong.

Speaker 16: but we are not going to guide Q2 for now. I'm going to have Raghu talk about...

But we're not going to guide Q2 for now I'm going to have a good talk about.

Speaker 3: the NEM situation and how he sees that playing out. With regards to NEM 3, there is no decision which was supposed to happen now, had it coming to effect.

The NIM situation and how he sees that.

With regards to name three.

The original decision, which was supposed to happen now had had.

Coming to effect.

Speaker 3: at least four to five months after the decision was made and then it also required additional time for the utilities to get up for that change. So realistically it was late 2022 or even in 2023 is when it would come into effect. So I just...

At least four to five months. After the decision was made and then it also required additional time for the utilities to get upfront for that change so realistically was.

In late 2022, or even in 2023 is when it would come into effect.

Speaker 3: from a pull through in demand was probably not be seen in the least for the next few quarters. It's likely going to be if there is, if nemtry holds in its current form, which is...

I think from a from a.

Pull through in demand, which would probably not be seen in at least for the next few quarters, it's likely going to be if there is if named <unk> in its current form.

Speaker 3: may not be likely, demand pull through it likely to happen in the year or even sometime early.

Which is may not be likely.

Demand pull through is likely to happen.

A year or even sometime early next year.

Speaker 7: Sounds like everything's good, but a little bit early to talk about exactly how that compares to the earlier guidance, right?

Got it alright sounds like everything is good but a little bit early to talk about exactly how that compares versus the earlier guidance right.

Yep.

Excellent Alright wish you all the best of luck. Thank you Sue.

Speaker 8: You are next question comes from the line of Colin Rush from Oppenheimer. Your question please.

Thank you. Our next question comes from the line of Colin Rusch from Oppenheimer. Your question. Please.

Speaker 9: Thanks so much. Again, as you start investing in some of the software applications and have the remote upgrade and possibility, how are you thinking about the business model and the revenue model for some of those software upgrades? Is it still included in the functionality of the hardware? Is there another one that would start thinking about it in the next couple of weeks?

Thanks, so much guys.

You start investing in some of the software applications and have been.

The remote.

Upgrade possibility how are you thinking about the business model and the revenue model for some of the software upgrades. So is it still.

Included in the functionality of the hardware is there another one that we might start thinking about the next couple of years.

Speaker 16: you know, it's still included in the functionality of the hardware, the way we think about...

It's still included in the functionality of the hardware the way we think about.

And of course, we have we have businesses like.

Solar graph probe.

Speaker 16: We have businesses like Pronto now which are software type businesses but if you ask me

Businesses like Pronto, known which our software type businesses, but if you asked me.

Speaker 16: If you ask me in reference to upgrade features, etc. The way we think about it is we want to offer more and more and more features, utilizing machine learning and AI, but with a view...

If you asked me in reference to upgrade features et cetera. The way we think about it is.

We wanted to offer more and more and more features.

Utilizing machine learning and AI.

But with a view to improve customer experience.

And so the data that we collect.

Speaker 16: the consumption data production data. We are not going to monetize.

The consumption data production data we have.

We are not going to monetize it.

And in the in the traditional sense and we are not going to aggregate the data and.

And do strange things with it rather what we are going to do is we're going to.

Look at patterns in the data.

We are going to basically develop algorithms, we are going to do regression.

We are going to ensure that we experience.

We improved the customer experience going forward. This is we.

We can do production forecasting we can do consumption forecasting we can we can do grid services events properly we can figure out if it is possible to predict the grid stability.

Speaker 16: We can do grid services events properly. We can figure out if it is possible.

Speaker 16: to predict the great stability.

Speaker 16: and provide customers an earlier warning before. So all of those for us are belong to the customer experience.

And provide customers an early warning before so all of those for us.

Belonged to the customer experience bucket.

Speaker 16: And our belief is if we do that properly for customers proactively, they're going to choose us all the time every time.

And are.

Belief is if we do that properly for customers proactively.

They are going to choose us.

Hi, everyone.

Speaker 9: Got it. That's helpful. And then just with the bullet ticket update on the state of the NOL, and when you're going to start having to pay cash taxes, and I should think about the tax rate as we get into that.

Got it that's helpful.

And then just with the <unk>.

Love to get an update on the state of the NOL.

When youre going to start having to pay cash taxes I should think about the tax rate as we get into the out years.

Speaker 5: Sure, I can answer that one. So currently in US, we don't pay material income taxes. We still have accessible NOL. For the upcoming tanker, you will see on Friday, we are going to file. We have more than 150 million dollars of federal NOL. And also we have federal and state R&D test credits. So between these years, next year, we don't expect to pay any significant taxes in the US.

Sure I can answer that one so currently we don't pay material income taxes.

They'll have sizable NOL.

Upcoming tanker you see on Friday, we are going to file we have more than 115 minute all that stuff.

Uh huh.

And also we have a.

Federal and state R&D tax credits. So this year next year, we don't expect to pay any significant taxes in the U S.

Great. Thanks, so much guys.

Speaker 1: But you are next question comes from a line of Mark's Trans from JP Morgan. Your question please.

Thank you.

Thank you. Our next question comes from the line of Mark Strouse from Jpmorgan. Your question. Please.

Speaker 17: Yeah, thanks very much for taking our questions and Eric congrats again, very much well-deserved.

Yes, thanks, very much for taking our questions and Eric Congrats again very much well deserved.

Speaker 17: Bondria, I wanted to go back to, you talked a lot about supply situation on this call. I wanted to go back to the three Q call, though, when you talked about specifically the IQ 8 and the potential for supply constraints there for just the ASICs given your early read on demand, can you just give us an update, you're specific to IQ 8, do you still see that as something worth monitoring this year?

Boundary I wanted to go back to you talked a lot about supply situation on this call I wanted to go back to the <unk> call, though when you talked about specifically the IQ eight and the potential for supply constraints. There for just the Asics given your your early read on demand.

Can you just give us an update specific to IQ eight do you still see that as something worth monitoring this year.

Speaker 16: Of course, it's always worth monitoring, but the situation is a little bit better. So IQ 8, we started ramping IQ 8 in late December . So shipped a little into four. IQ 8 uses, I mean, overlap, but when IQ 8 and IQ 7,

Of course, there's always worth monitoring, but the situation is a little bit better. So IQ eight we started ramping IQ eight in late December so shipped a little.

In Q4.

<unk> users.

Laboratory and IQ eight to 19, 7%.

Speaker 16: quite high except for the as you rightly pointed out. We don't see any problems.

It's quite tight.

For the AC.

You rightly pointed out.

We don't see any problems.

Speaker 16: respect to that is like you know supply you know right now so we would be

With respect to that is sick.

Supply right now so we would be.

Heavily ramping.

Speaker 16: the mix of IQ 8 versus IQ 7. That's our preference going forward.

The mix of IQ eight versus IQ seven.

Preference going forward.

Speaker 17: Okay. And then with the facility you're looking at in Europe for microinverters later this year, anything you can share yet regarding the potential output of that on a microinverter's per quarter per year type metric.

Okay, and then with the.

The facility you are looking at in Europe for micro Inverters later this year.

Anything you can share yet regarding the potential output of that on a micro inverters per quarter or per year type metric.

Speaker 16: We haven't finalized the location or the contract manufacturer yet. We are well under negotiations there. But typically what we do is when we install a contract manufacturing facility, we put something called as a complete auto line.

We haven't finalized the location or the contract manufacturer yet we are well under negotiations there.

But typically what we do is when we install a contract manufacturing facility, we put something called as a complete auto line.

Speaker 16: one full lot of line. One full lot of line is fixed. That's about, you know, 750,000 microinverters are caught.

One full lot of aligned one full auto line is fixed that's about 750000 micro inverters a quarter.

Speaker 16: So you can model that saying, you know, we will have likely a full auto line and we need to finalize the location. We are going to try our best to get it operational by end of the year. And it will be capable of producing 750,000 micro-inverse. So we are going to try to get it operational by end of the year.

So you can model that saying, we will have likely a full auto lines and we need to finalize the location, we will try our best to get it operational by end of the year and it will be capable of producing 750000 Microgrid works.

Okay very helpful. Thank you.

Speaker 8: You are next question comes to the line of James West from Evercourt and ISF.

Thank you. Our next question comes from the line of James West from Evercore ISI.

Speaker 8: Hey, good afternoon guys and congrats on a nice strong fitness to the year.

Hey, good afternoon, guys and congrats on a strong finish to the year.

Speaker 8: and also congrats to Eric and Manila for working with you going forward. I wanted to continue on the path of Europe here. I mean, you're pretty excited. You talked about rapid growth. What do you see driving that growth the most in Europe for you and what made you kind of make this decision to build a facility in Europe ? Yeah.

It also congrats to Eric and maybe look forward to working with you going forward.

Continue on the path of Europe here, I mean, Youre pretty excited you talked about rapid growth what do you see driving that growth the most.

Europe for you and what made you can make this decision to build a facility in Europe .

Yeah.

Europe , we are excited.

Speaker 16: The prospects have grown there. We grew double in 2021 compared to 20.

The prospects of growth that we grew double in 2021 compared.

Through 2020.

Speaker 16: Europe has been a little bit more advanced than the US in terms of solar.

Europe has been a little bit more advanced than the U S in terms of solar.

Speaker 16: and basically the adoption is quite nice.

And basically the adoption is quite nice there.

Speaker 16: And we are very strong in Netherlands. We're very strong. France, we are very strong. Belgium, we just introduced storage in Adi.

And we are very strong in.

Netherlands.

Very strong France, we are very strong.

Belgium, we just introduced.

<unk> in addition to solar that's nicely ramping.

Speaker 16: Germany is one of the very exciting markets in Europe , which is probably over a gigawatt, one gigawatt solar and 80% of the touch of that for storage.

Germany is one of them very exciting markets in Europe , which is probably over a gigawatt.

One gigawatt solar and 80% attach of debt, but storage.

Speaker 16: The reason it's 80% of the damage is most people do self-consumption because of fear and tariffs. They don't have netmeat.

And the reason is 80% of edge as most people do self consumption because of feed in tariffs there. They don't they don't avnet metering feed.

Speaker 16: and feed and tariff. So, storage is strong and actually Italy, we are entering Italy.

Feed in tariffs.

Storage is strong and actually Italy, we are entering into.

Speaker 16: and through our partner, Maxion and his partner as well. And they, you know, with the help of AC modules, we are going to be, you know, ramping on solar in Italy. And now we are going to add...

And through our partner Maxion is our partner as well.

<unk>.

With the help of AC modules, where we are.

I'm going to be ramping on solar in Italy.

And now we're going to add storage in Italy.

Speaker 16: Spain is very strong, too. Spain is strong, Poland is strong. UK is starting to ramp up. So we have.

Spain is very strong to Spain as strong <unk> strong.

UK is starting to ramp up.

So we have pockets.

Speaker 16: Yeah, actually not even pockets. There's many countries which are in the process of ramping, both solar and storage, and we have plans to introduce

Off.

Actually not even bucket with many countries, which are in the process of ramping both solar and storage and we have plans to introduce.

In our storage.

Speaker 16: Through the year, one or two countries every quarter.

Through the year.

One or two countries every quarter.

This year.

Speaker 16: So in general, we are extremely excited in the analyst day if you see in 2019.

So in general we're extremely excited in the analyst day, if you see in 2019.

Speaker 16: 2019 I told you we had a handful of people in Europe like right? Five or six people in now

2019, I told you we had a handful of people in Europe like.

Five or six people and now.

Speaker 16: Now that team we have probably we have 35 to 40 people today. We have increased those we are going to continue.

That team we have a.

Probably we have 35 40 people today.

Right.

We've increased those we are going to continuously ramp that gain.

And theyre doing well.

Speaker 8: Great, great. And then on the IQ 8, you talked about, the lower supply issues that you're heavily ramping the mix of IQ 8 replant to, does that suggest that perhaps you, that normal four to six quarter adoption period could be on the shorter side? No, no, no, I say that blend to him, not heavily ramping yet, right? Because we've just started. Got you, okay. We just started, we shipped it, we, we, we, those runners. Man,

Okay, great Great and then on the IQ eight you talked about.

The local supply issues that youre heavily ramping the mix about Kuwait, where you plan to does that suggest that perhaps you that normal four to six quarter adoption period could be on the shorter side.

Not on I would say that plan to them not heavily ramping yet right. Because we've just started gotcha. Okay. Just started we shifted ABB.

Speaker 16: late December is when we started ramping and typically our profile would call a successful ramp 4 to 6 quarters.

May to December is when we started ramping and typically our profile I would call a successful ramp four to six quarters right. That's what I call a successful ramp and we expect IQ eight to fall within that range.

Speaker 16: That's what I call a successful RAM. And we expect I to evaluate to fall within that range.

Speaker 16: You know, having said that we do have installers, for example, like SEMPERSOLEDIS. We did a press release. You know, SEMPERSOLEDIS switched to us because of IQEATS. Right. And...

Now having said that we do have installers for example, like simple Solaris, we did a press release.

Sanford <unk> switch to us because of accurate right.

Right and many installers love.

Speaker 16: sunlight back up featured. They love it. They may not, you know, they may not use it as a significant fraction, but they love the fact that it's got technology and that they can use it if they want to. So they'll buy a

It sounded like backup feature they love it they may not.

They may not use it as a significant.

And a fraction, but they love the fact that it's got technology and that they can use it.

If they want.

So they'll buy IQ eight over IQ seven right.

Alright.

Thanks Badri.

Speaker 8: I think you are next question comes to the line. Cassie Harrison from Piper Sandler. Your question please.

Thank you. Our next question comes from the line of Cashing Harrison from Piper Sandler Your question. Please.

Speaker 7: Good afternoon. Wrap on the call and Eric can wrap on the retirement.

Good afternoon, congrats on the quarter and Eric Congrats on the retirement.

Alright, thank you.

Speaker 12: question. But if there weren't any logistic related challenges today, and that's theoretical world, do you think that demand would be closing in on your 180 megawatt hours of cell supply capacity today, or is that maybe a bit too up?

Fair question.

But if there weren't any logistic related challenges today.

And that theoretical world do you think that demand would be closing in on your 180 megawatt hours of cell supply capacity today or is that maybe a bit too optimistic.

Speaker 16: Well, you know, I'm not gonna break out numbers, but the demand is very

And I am not going to breakout numbers, but the demand is very strong.

Speaker 12: Okay. And then maybe a question for either Eric or Mandy. So I know margins, gross margins for batteries aren't as high as the gross margins for the inverters. But I was wondering if you could maybe talk a little bit about the incremental op-ex associated with battery sales.

Okay, and then maybe a question for either Eric or Mandy.

So I know margins gross margins for batteries aren't as high as the gross margins for the Inverters, but I was wondering if you could maybe talk a little bit about the incremental opex associated with battery sales and basically I'm wondering if if since the channels for Inverters and batteries are so intertwined Doug.

Speaker 12: And basically I'm wondering if, you know, if since the channels for invers and batteries are so intertwined.

Speaker 12: Does the gross profit from batteries just go straight into the operating income line with no real impact to op-ed?

Gross profit from batteries just go straight into the operating income line with no real impact to Opex.

Speaker 12: or would you expect an increase in op-X as you ramp batteries as well?

Or.

Would you expect an increase in Opex as you as you ramp batteries as well.

Speaker 16: We don't look at it like that. We basically, you know, regardless, you know, the company is modeled on OpEx. Our baseline is 35, 15 and 20. Time to time we may be a little bit higher on the OpEx site, but we will always be well above the operating income. But we don't think about OpEx like that. For us.

Well.

We don't look at it like that we basically now regardless you know the company's model on Opex, our baseline is 30 15.

<unk> and 'twenty time to time, we may be a little bit higher on the opex side, but we will always be available with the operating income.

But.

We don't think about opex like that for US we think about the full system.

Speaker 16: When we think about a full system, it is a micro inverter, it is a battery, it is a gateway, it is a system controller. And when you combine all of these together, okay, I forgot load control, I forgot EV charger.

When we think about the full system. It is a micro inverter.

It is a battery it is a gateway it is.

System controller.

And when you combine all of these together, okay, yes, I forgot load control I forgot EV charger.

Speaker 16: a general compatibility. When I combine all of those, the number of interactions explode. And the number of interactions,

Generator compatibility when I combine all of those the number of interactions explode.

And the number of interactions explored means our.

Speaker 16: You know, our R&D has to scale up.

Our RMB.

Speaker 16: And we cannot scale up our indie randomly. It will scale up as a fraction of revenue. We have been disciplined there. So.

<unk> Kayla.

And then we cannot scale of R&D randomly.

Caleb as a fraction of revenue we have been disciplined.

Speaker 16: It's a long way, I've been a long way in the answer, but you know...

So.

It's a long way.

Long winded answer but.

Speaker 16: We invest, we invest at a system level.

We invest we invest at a system level.

Speaker 16: And it is not batteries versus microwave, but everything has to scale up in the company.

And it is not batteries versus micro inverter everything is to scale up in the company.

Thank you.

Speaker 8: Thank you. Our next question comes to the line of Joseph Asha from Guggenheim Partners. Your question please.

Yeah.

Thank you. Our next question comes from the line of Joseph Osha from Guggenheim Partners. Your question. Please.

Speaker 11: Hi there, and Eric, we look forward to hearing what your next venture is going to be. Two totally unrelated questions. First, as regards grid services, you've talked about the progress we're making there. Are you typically working with someone that aggregates and manages resources like a stem or an enbal or an autogrid or this is a situation where you're providing a functionality all the way to facing off to the utility?

Oh, Hi, there Eric.

Hearing what your next venture is gonna be.

Two totally unrelated questions first as regards grid services, you've talked about the progress we're making there or are you typically working with someone that aggregates manages resources like.

And then Bob or an order grid or is this a situation where you're providing the functionality or all the way too faced involved.

Colby.

Speaker 16: We know both business models. We work, for example, in the connected solutions program, we work with an aggregator called Energy Hub. And.

We know both business models.

For example in the in the connected solutions program, we work with an aggregator paradigm energy hub.

And they work with the three utilities.

Speaker 16: you know the three utilities I talked about and we work in that model but you know having fed that are

The two utilities I talked about and we worked in that model.

Speaker 16: Our relationships are getting better with the utilities and we are starting to work directly with the utility.

<unk> said that.

Our relationships are getting better with the utilities and we are starting to work directly with agility.

Speaker 16: The APS program will show that you're going to start seeing more announcements like what I said we have a dozen grid services engagement engagement.

The Aps programs that youre going to start seeing more announcements like what I said, we have a dozen services engagements engagements.

Speaker 16: in the pipe and many of them are working directly with the utilities and we do have all of the software capable

In the pipe and many of them are working directly with the utilities and we do have all of the software capability.

Speaker 16: All of the VPP capabilities dispatching and dispatching a fleet at an aggregate level, we can provide that software to the utility.

All of the VP PK parameter that is dispatching.

And in our dispatching our fleet at an aggregate level, we can provide that software to the utility.

Speaker 16: and they can utilize that software to control an M-phase fleet.

And they can utilize that software to control and Enphase fleet.

Speaker 11: Okay, so that's interesting. You've got that whole stack. Thank you, that's very helpful. Totally unrelated question. Looking at your success in Europe , obviously that market's growing. If you had to sort of split up your growth there into market growth versus share gain, these of the, you know, still some of the fairly large legacy string and birter providers there. I'm wondering how you might think about that.

Okay. So thats interesting you've got you've got that whole stack. Thank you best of course helpful. Totally totally unrelated question looking at your success in Europe , obviously that market is growing.

<unk> sort of split up your growth there into market growth versus share gains B b.

Still some of the fairly large legacy stream Burger.

Providers there Im wondering how you might think about that.

Speaker 16: You're talking about with reference to Euro.

You are talking about with <unk>.

<unk> to Europe .

Speaker 11: Yeah, yeah, sorry, that was a convoluted question. Let me try it again. How much of your growth do you think's coming from just the market growing in Europe and how much is coming from taking share? Yeah.

Yes, yes, sure Ive got convoluted question, let me try it again, how much of your growth you think is coming from just the market growing in Europe , and how much is coming from mark taking taking share.

Yes.

I would say mix of both.

Speaker 16: You know, obviously the market is growing and therefore we get our fair share especially in places like Netherlands and France and primarily what moves

Obviously, the market is growing and therefore, we get our fair share, especially in places like Netherlands, and France, and primarily what moves competitors, what most customers to us is that quality and service.

Speaker 16: Compositors are, you know, what moves customers to us is that call it and our service.

Speaker 16: as long as we are able to maintain our target 500 BPM which is 0.05% annual failure rate.

Is that as long as we are able to maintain our target 500, BPM, which is 0.05% annual failure rate.

Speaker 16: as long as we are able to maintain it on microinverters, as long as we provide outstanding customer service, 24 by seven, two customers. You know.

As long as we are able to maintain it on micro inverters as long as we provide outstanding customer service 24 by seven two customers.

Sure.

We think.

We have the upper edge there.

Speaker 16: And so that's the big reason why customers move over.

And so that.

That's a big reason why customers move over to us.

Speaker 11: The reason I'm asking, and I'll go in a minute here, is that in the US, obviously, it's just down to you and what competitive you're at in Europe , it definitely is not. So I'm just wondering if we could pause if we imagine a future in a couple of years, where really, it's only you and your main competitor and some of these string and vertical companies just to go away. So, I'm...

Yes, the reason I'm asking it all go away in a minute here.

<unk>, obviously acute downs and one competitor in Europe .

Europe is definitely not so I'm just wondering if we could possibly imagine a future in a couple of years, where really it's only you and your main competitor in some of these string inverter companies just go away.

Well I mean look.

Speaker 16: We can't predict the future, but the reasons are very similar. People are tired of enduring bad quality products.

We can't predict the future, but the reason they are very similar people are tired of it.

And during.

Bad quality product.

And that's the single most reason they come to us.

We are a little bit.

Yeah, you know, expensive, but you cannot be looking at expense. You cannot be looking at pricing in vacuum. You gotta be looking at the entire cost of ownership.

Expensive, but you cannot be looking at expense you cannot be looking at pricing.

Vacuum you've got to be looking at the entire cost of ownership.

And you know, as long as we maintain our quality.

And.

As long as we maintain our quality.

Like what I said, that's the most important thing, which we are committed to and the customer experience that cannot let us down.

Like what I said, that's the most important thing, which we're committed to and the customer experience.

That cannot let us down.

We will continue to gain share. Thank you.

Okay. Thank you. Thank you very much.

Next question comes from the line of, from BMO Capital Market. To your question, please.

Yes.

Thank you. Our next question comes from the line of <unk> from BMO capital markets. Your question. Please.

Good afternoon. Thank you for taking my question. Most of my questions have been asked, but I was just wondering if you guys had any sense or color on how much of the battery capacity you delivered today. It's been for customers that are actually retrofitting existing systems versus a kind of new solar PV plus storage installation.

Good afternoon. Thank you for taking my question.

I think most of my questions have been asked but I was just wondering if you guys had any sense or color on how much of the battery capacity delivered.

To date it has been for our customers that are actually retrofitting existing systems versus kind of new solar PV plus storage installation.

Was that included, the retrofit opportunity? Was that included in your Agust Amal state presentation when you guys talked about a serviceable, addressable market of 1.5 gigawatts?

Was that included the retrofit opportunity was that included in your analyst.

Analyst day presentation. When you guys talked about a serviceable addressable market of one five gigawatt hours.

It was and it's hard to track, but I would say

It was and.

It's hard to track, but I would say.

I would say that is a good healthy mix of both. That's what I would say.

I would say that is a good healthy mix of both.

And, you know, obviously when they have NFase microinverters, they would prefer NFase batteries.

What I would say.

And.

Obviously, when they have enphase micro inverters, they they would prefer enphase batteries.

Yeah.

Great. Thank you for that congratulations on the quarter.

Thank you.

Thank you. Our next question comes to line up. Brenney Satish from Wells Fargo. Your question, please.

Okay.

Thank you. Our next question comes from the line of <unk> Satish from Wells Fargo. Your question. Please.

My good afternoon. Can you talk about the IQ 8D and how that rollout is progressing? And I guess for the small commercial market, is it enough to win over the installers that serve this market or do you need to ultimately partner with someone like a developer to really accelerate deployment into the commercial market?

Hi, Good afternoon can you talk about.

And how that rollout is progressing and I guess for the small commercial market is it enough to win over the installers that serve this market or do you need to ultimately partner with someone.

Like a developer to really accelerate deployment into the commercial market.

I give a deep product is a little bit late.

The product is a little bit late.

As you know, I thought we would be in production in Q1, but we are a little late. And the reason why we are a little late is we would like to take the time and do the full system.

Yes.

I thought we would be in production in Q1, but we had a little late.

And the reason why we are the latest.

We would like to take the time and do the full system.

And I would say the full system I mean.

It is not just a microinputter which is already qualified and passed compliance. It is the gateway, the cloud shaft where the fleet...

It is not just a micro inverter, which is already qualified and passed compliance. It is it is.

The the gateway.

<unk> software.

Fleet management.

The design proposal software.

The permitting.

And the reason why we like the small commercial market is because it is an extension of residential market. In residential, we saw...

Off grid.

And the reason why we like the small commercial market is because it is an extension of residential market.

In residential we service up to 20 kilowatts.

that goes from 20 small commercial goes from 20 to 200 kilohertz. And why is that important? It's...

That goes from 20 small commercial goes from 20 to 200 kilowatts.

And why is that important.

The same long tail installers.

are the ones who participate in the small commercial markets.

Are the ones who participate in the small commercial market.

And Thats our focus.

That's our focus. That's where we think we add a lot of value because the pain points are the same.

And that's our focus that's where we think we add a lot of value because the pain points out of the same.

It is quality and service.

and we do have to pay attention to those areas and the challenges will be a little bit different as we go from 20 kilowatts to 200 kilowatts. You know, we have used PLC for communication and now when you are doing it with hundreds of microinverters, those will be stretched. But we look.

And we do have to pay attention to those areas and the challenges will be a little bit different as we go from 20 kilowatts to 200 kilowatts.

We have.

<unk> plc for communication and know whether youre doing it with hundreds of micro inverters those will be stretched.

We look forward to.

You know, we are ramping with those installers, we already know and do business with. And we.

You're ramping with those installers, we already know and do business with.

And we can do rapid shutdown as well.

you know easily. So that's a major driving force versus other, you know, other competition. So in short, it's the similar install basis residential. We have the relationships already. The any traffic shutdown.

Easily so that's a major driving force versus other.

Other competition so so in short.

It's the similar installed basis residential.

Have the relationships already.

Danny rapid shutdown.

They need very high quality they need great service.

And it's a natural extension for us from residential.

And just to follow up, what then is your latest timing in terms of IQAD?

Thanks, and just a follow up.

And then as your latest timing in terms of IQ <unk>.

Like what I said, we are going to ship to select installers.

Yes, like what I said, we are going to ship to select installers.

for a pilot ramp in Q1. So we'll have a small revenue in Q1.

For the pilot ramp in Q1, so we will have a small revenue in Q1.

but real ramp will be over the next few quarters. This is not a...

But the real ramp will be over the next few quarters. This is not a.

It's not that when I'm ready, I start ramping immediately from day one. It will take some time for the market to develop.

It's not that when I'm ready I start ramping immediately from day one it is it'll take some time for the market to develop.

So you should expect over the next several quarters is when it'll ramp to a healthy level and we...

There. So you should expect over the next several quarters as revenues ramp to a healthy level and we.

We broke down those details in the another day. Paracetaceous.

Broke.

We broke down those.

Those details in the analyst day.

Got it that's it for me and congrats Eric on the retirement.

Thank you.

Thank you. Our next question comes from all I know Stephen and the placement from Wolf Research.

Thank you. Our next question comes from the line of Steven Fleishman from Wolfe Research.

Just a question, maybe to put NEM 3.0 in some context. Could you give us?

Yeah.

Just a question.

Maybe to put any M.

Three point O in some context could you give us some.

from sense of what percent of revenue is coming from California in your Q-1 forecast or from 2021 actual.

So what percent of revenue is coming from California.

In your Q1 forecast or from 2021 actuals.

Yeah, I'm not sure about the exact number. I would estimate something like, you know, 20... Yeah, 20% of our revenue.

Yes, Im not sure what the exact number I would estimate something like.

20.

Yes, 20% of our revenue roughly overall revenue.

And then, uh, separate question, just in some of the, I know, uh, BVBs kind of disappeared from focus, uh, recently, but some of the versions later versions included.

Great.

And then <unk>.

Separate question just in some of the I know BBB kind of disappeared from focus recently, but.

Some of the.

Versions later versions included.

subsidies for domestic production inverters and including micro inverters.

Subsidies for domestic production and burgers, including micro Inverters.

If we were to ultimately get a bill that had that in there, how quickly could you shift to domestic production?

If you if we were to ultimately get a bill that had that in there how quickly could you shift to domestic production.

So the BBB, the one in debate is 11 cents per watt credit.

So.

The BBB, the one and debated 11 cents per watt credit.

But micro inverters.

And you know that we will never do manufacturing ourselves. We will enlist the help of our contract manufacturers. It's quite attractive to have-

And you know that we are we.

We will never do manufacturing ourselves, we will enlist the help of our contract manufacturers.

Quite attractive.

To have a made in America products with that kind of credit.

And we do have contract manufacturers who are potentially lined up should this happen.

And we do have.

Tracked manufacturers, who are potentially lined up.

The question on how long it will take from when we, you know, I select a contract manufacturer to when we can start ramping in the US would take me six to nine months.

This happened.

Question on how long it'll take from when we select a contract manufacturer to when we can start ramping in the U S will take six to nine months.

Great.

Thank you I appreciate it.

If you are next question comes to the line of Sophie Kahn from Keybank, your question.

Thank you. Our next question comes from the line of Sophie Karp from Keybanc. Your question. Please.

Hi, good afternoon. Thank you for taking my question and congratulations again on a great quarter.

Hi.

Good afternoon. Thank you for taking my question and congratulations again on the great quarter.

All of the questions have been answered, maybe just a couple from me. First, how do you envision your year shaping up set in the side, I guess, the unpredictable events such as the outcome of them or any major disruptions? You grow so fast that the reality almost doesn't matter, but should we be expecting maybe a sum pocket of relative softness somewhere throughout the year based on your Gmail?

Our questions have been answered maybe just a couple from me.

How do you envision your year shaping up sitting on the side I guess.

Unpredictable events, such as the outcome of them or any major disruption.

So fast that seasonality almost doesn't matter, but should we be expecting maybe some pockets though.

Softness somewhere throughout the year based on seasonal pattern.

I think our business has fairly diversified that between the different states in Europe between not just shipping solar, sorry, different states in the US and not just shipping solar only, but you're seeing that solar pastorage is also.

I think our business is fairly diversified.

Between the different states in Europe between not just shipping solar I totally different states in the U S and not just simply shipping solar only but youre seeing Dutch solar plus storage is also.

You know, many different states are now, you know, the tax rates are continuing to grow up well beyond California. It's like California, Florida, Texas, Puerto Rico, Hawaii, East Coast, et cetera. The services is becoming the business of the grid services also continuing to grow.

Many different states are now.

Attach rates are continuing to grow up well beyond, California, California, Florida, Texas, Puerto Rico, Hawaii disclosed, etc grid services is becoming.

The business is good service is also continuing to grow.

We talked about how fast Europe is growing, both over the year, more storage will start shipping storage into newer countries in Europe as well. So in general, and as well as countries like Brazil, it's continuing to grow. So what you're seeing is our business being more and more diversified.

We talked about how fast Europe is growing.

Over the year more storage.

Start shipping storage into new countries in Europe , as well so in general and as well as countries like Brazil is continuing to grow so what youre seeing is a business being more and more diversified.

not only within the US, not only within California, but outside of California, other states in US and Europe as well. So while we may see these occasional road bumps like an M3 issue here in California, I think the business is pretty robust anymore that we'll be able to absorb those problems.

Not only within the U S not only within California, but outside of California.

Other states in the U S and Europe as well so while we may see these occasional road bumps like in like a NIM three issue here in California.

The business is pretty robust anymore.

We'll be able to absorb those pumps.

Thank you. And as a follow-up question, maybe you can talk a little bit about what you're using now. And M&A, you're making the data, gives the transaction, but very small. Is there anything out there, I guess, that you use the potential to attract opportunities in some spaces or some technologies that you may look into potentially doing modules this year? Well, I mean, we have a strategy.

Thank you.

Is it parallel question.

Maybe if you can.

Talk a little bit about what your views are now in M&A.

Vaccines, but fairly small is there anything out there I guess.

Potentially attractive opportunities.

Mrs.

Or technologies that you may look into potentially doing more deals this year.

Well I mean, we have a strategy.

Strategy is basically.

selling best in class, you know, products for home energy systems.

Selling best in class products for home energy systems.

two homeowners through our installers and distribution partners enabled by digital.

To homeowners through our installers and distribution partners enabled by a digital platform.

So components of a home energy system, if you see, we have solar, we have storage, we have grid services, we're compatible to generators, we have load control, we didn't have EV before we bought EV chargers. We think EV chargers is, you know, they need to be managed.

No.

Components of the home energy system, if you see we have solar.

You have storage, we have grid services.

Comparable to generators, we have no control.

<unk> before we bought EV Chargers, we think EV Chargers.

They.

They need to be managed.

And we bought them for that reason.

We have fuel cell partnerships.

There's nothing much to talk about it yet, we'll talk about it when we are ready.

Nothing much to talk about it yet we'll talk about it again when we are ready there.

that's on the home energy system. So we'll continue to add more and more things at a product level there if it is aligned with our threads.

That's on the home energy system. So we will continue to add more and more things at a product level. There. If it is if it is aligned with our strategy.

And I cannot talk about any specific companies right now. On the Installal Digital Blad.

And I'm not.

I cannot talk about any.

The specific companies right now on the installer digital platform.

There are six pieces which I mentioned in the analyst's day, which is which lead management.

There are six pieces, which I mentioned in the analyst day, which is which is lead management.

is an interesting area for us and we will keep you informed when our plans are finalized there. So that's the potential.

Which is an interesting area for US then we'll and farm.

We will keep you informed when when our plans are finalized there so that's important Julien.

design and proposal software we bought a company solar graph pro and we are making it meaning a soft desk and we are making it a lot better by introducing shading by introducing storage 3D all bells and whistles so we are making that better then

Design and proposal software, we bought a company solar graph pro and we are making it meaning soft desk and we are making it a lot better.

By introducing shading by introducing storage <unk>, all bells and whistles, so we're making that better.

Then permitting services.

Our team in NIDA services nearly 30% of the entire North American solar business, solar permitting.

Our team in Noida services, nearly 30% of the entire North American.

Solar business solar permitting business.

they do that today and we are going to make that better in terms of injecting more autumn.

They do that today, and we are going to make that better in terms of injecting more automation looks like.

then will come to commissioning software.

Then we'll come to commissioning software that.

It's homegrown and there is no way we are going to buy a company for that. It's got hundreds of man years of work in it and we are going to make that continuously better.

Sure.

It's homegrown and there is no way, we're going to buy a company for that.

It's got hundreds of many years of working it and we're going to make the continuously better we have a very large team there.

Then comes the enlightened mobile app. This is the homeowner app, you know, monitoring, fleet management, etc. Which again, enormous, you know, investments, hundreds of manures, and we will grow organically there. O&M.

Then comes the enlighten mobile app.

This is a homeowner app monitoring fleet management et cetera, which again and normal.

Investments hundreds of millennials.

We will grow organically there.

We saw the investments that we made in 365 pronto. These are software platforms, that's how we like it. We're not gonna get into the...

You saw the investments that we made in 365 pronto.

Software platform, that's why we like it.

We're not going to get into the.

know, in M itself, we're not going to have traction letters, but we are going to enable transactions with a two-sided marketplace.

O&M itself, we are not going to attract some led us, but we are going to enable.

Enable transactions with a two sided marketplace.

customers on one hand, you know, service providers on the other hand and we connect both of them to the two-sided market place.

On one hand service providers on the other hand, and we connect both of them the.

Two sided marketplace. So.

Now the two components we have to be thinking of is best in class homo energy system.

And are the two components you have to be thinking up with best in class home energy systems.

Best in class digital install or digital platform and whatever acquisitions we need for that we will do

Best in class digital installer digital platform and whatever acquisitions remains that we will do.

But those will likely be small acquisitions. They'll be tucking. There is no silver bullet.

But those will likely be small acquisitions there'll be tuck in.

There is no silver bullet.

Got it thank you so much.

that you are next question comes from the line of Tristan Richardson from Truist, your question please.

Thank you.

Thank you. Our next question comes from the line of Tristan Richardson from Truest. Your question. Please.

Hey, good evening guys. Really appreciate all the commentary tonight. Just one for me on the EV charging product. Now that you've had that under the umbrella a few months, curious about the innovation pipeline there and whether it be vehicle to grid or vehicle to home.

Hey, good evening, guys really appreciate all the commentary and I just just one for me on the EV charging product now that you've had that under the umbrella of few months I'm curious about the innovation pipeline there.

Whether it be vehicle to grid or vehicle to home and.

potential there to develop that product or if so, could that be margin-accretive? Or you see more of the EV charging product complementary to just your core-on-tumble strategy?

The potential there too.

Develop that product or.

So could that be margin accretive.

Or are you seeing more of the.

EV charging product complementary to just your core ensemble strategy.

Yeah, so I'm going to articulate a little bit on what we are doing tactically, maybe for the next few months and then you know, Rahul will talk about the vision on...

Yes, so I'm going to articulate a little bit on what we're doing.

Tactically maybe for the next few months and then Rocco will talk about the vision.

V2H and V2G. So we're very happy with the acquisition. Clipper.

B to B to H B to G. So we're very happy with the acquisition of Cooper Creek.

They already make very high quality level 2 chargers. They have ships.

They already make very high quality level, two chargers they have shipped.

110,000 of them. Healthy revenue, growing and the market is growing at a 40% KG. Like what we told you at the analyst day and very nice gross margins, profitable business. So we're very happy there. All we want there

110000 of them healthy revenue growing and the market is growing at a 40% CAGR.

We told you at the analyst day.

Very nice gross margins profitable business.

So we're very happy that all we want that as is.

And immediately we wanted to do three things give them a lot of scale.

KL means only a contract manufacturer can do it properly.

Scale means.

Only a contract manufacturer can do it properly.

professionalize that that's number one number two is introduce paper creek chargers to our installers and

So professional life that's number one number two is introduced.

Chargers to our installers and distributors.

And obviously we need to make sure the supply chain is robust there and that's why I said that we need to transfer to contract manufacturing.

And obviously, we need to make sure the supply chain is robust there and thats why.

I said that we need to transfer to contract manufacturing first number three which is important as I. Blake every Q3 charges are shipped from the contract manufacturer to.

The three, which is important is I'd like every clipper to recharge your shift from the contract manufacturer to have connectivity.

That connectivity is extremely important because we need to make these chargers intelligent.

To have connectivity in it and that connectivity is extremely important because.

We need to make these charges intelligent.

They need to be able to support, you know, optimize tariffs. They need to be able to support charging on a schedule.

They need to be able to support.

Optimize tariff they need to be able to support charging on a schedule.

They should help support green electrons. If a homeowner says, I want to utilize solar...

They should help.

Support clean electrons if a if a homeowner states I want I want to utilize solar.

for my EV charging, you should be able to pick that preference immediately and make that happen.

But my EV charging you should be able to pick that preference immediately and make that happen.

should be able to work with the ensemble system seamless. So, you know.

It should be able to work with the ensemble system seamless.

So.

Connectivity will help us on those fronts.

Those are the three actions that we are thinking immediately. And then comes, you know, international expansion is another one which I should, which I should have said, that's in our short term focus.

So those are the three actions that we are thinking immediately and then.

You know international expansion is another one which I should.

I should have said that that's in our short term focus which is.

Europe is a very big market for EV. So it's obvious that we need to be in Europe . So we are going to be starting to ramp heavily in that front, in the ramp or blend.

Europe is a very big market.

For Evs, so it's obvious that we need to be in Europe . So we are going to be we're going to be starting to ramp heavily in that front and ramp up plans there.

The last one is by directionality. So Rago is going to talk about that. Yeah, I think, you know, as Sadi mentioned, integrating EV into Ensemble, where you're treating EV purely as a load, brings a lot of value for the homeowner because you can really control, you can decide on what the source of the electrons are, the duration, the rate, etc. So a lot of value in the energy management system. But beyond that, EV just...

The last one is bi directionality sort of who's going to talk about that I think.

Mentioned integrating EV into ensemble, when you're treating EV purely as a load brings a lot of value for the homeowner because you can you can really control it.

Can decide on what the source of electrons out the duration, the REIT et cetera.

A lot of value in the energy management system, but beyond that just as a.

should not be looked at simply as a load. There's an opportunity to do reverse power flow there, which is fully bi-directional, where you can use the EV for things such as grid services as well as for resiliency. So the grid services part would be the way could a grid part. And then the resiliency part would be the way could to home part in the event of an outage. You have this extra significant amount of source there, which is about 100 kilowatt hours. Can that participate and keep your home micro grid to see how it works?

Should not be looked at simply as a load there is an opportunity to do reverse power flow dead, which is fully bidirectional, where you can use the EV food.

Both for things such as grid services as well as for resiliency. So the grid services part would be the vehicle to grid Park and then the resiliency part would be the vehicle to home part in the event of an outage you have this extra significant amount of source said, which is about 100 kilowatt hour conduct participating keep your home keep the home micro grid.

Sustained in the event of an outage so both of those both vehicle to grid and vehicle to home requires some development.

So both of those both vehicle to grade and vehicle to home requires some development. And that development includes whether you know decisions have to be made whether you're going to deliver the energy with DC or AC and for us it doesn't matter. We are open to doing it with both AC or DC or IQ 8 as capable of

In fact development includes weather.

Decisions have to be made whether youre going to deliver the energy D C or D C doesn't and for US. It doesn't matter. We are open to doing it with both <unk> capable of delivering.

Delivering of providing a DC interface into the car or an AC.

Providing DC interface into the car or in AC. In addition to that there are a few other things challenges that need to be small make standards development still needs to complete.

In addition to that, there are a few other things, challenges that need to be solved. Like standards development still needs to complete. There are a couple of standards, you see us in Chathamau today, but I think there are, IEEE standards are being developed to figure out how to do this bidirectional power flow.

There are a couple of standard Ccs and charter more today, but.

I think the <unk> standards are being developed to do to figure out how to do this by directional bidirectional power flow and finally, a great interaction is pretty complex because now the vision is to be fully compliant to all the advanced grid functions requirement. So we are.

And finally, the grid interaction is pretty complex because now the EV has to be fully compliant to all the advanced grid function requirements. So we are diving deep into it, we are laying out the full plan, but regardless of whether we do it to an AC to AC interface or an AC to DC interface or our IQH are capable of providing both of those. And I think bringing...

We are diving deep into it we are laying out the whole plan, but regardless of whether we do it through an AC to AC interface on a DC to DC interface argue agent capable of providing both of those and I think bringing the EDI onto the ensemble platform and providing and not just being a smart load, but also being a variant.

the EVO on to the Ensemble platform and providing and not just being a smart load, but also being a very intelligent source brings a lot of value for our customers.

<unk> brings a lot of value for our customers.

Badri. Thank you.

Rick all the best to you.

Thank you, our next question comes to the line of Eric Stein from Craig Hallum. Your question, please.

Yes.

Thank you. Our next question comes from the line of Eric Stine from Craig Hallum. Your question. Please.

Hello, I'm just sneaking one in here on Clepper Creek. I know you just touched on that, but just curious. I mean, based on the nature of that product, when you do install, roll that out to the installer network. I mean, how do you see that play out, maybe compare it to the storage product, and then curious. How do you think of this, or how should we think of it in terms of attach rates, or maybe capture rate of spend per home, just anything like that. That's what the guy is going for.

Hello.

<unk> in here on Clipper Creek I know you just touched on that but just curious I mean based on the nature of that product when you do install and roll that out to the installer network I mean, how do you how do you see that play out maybe compare it to the storage product and I'm curious.

How do you think of this or how should we think of it in terms of attach rates or maybe capture rate of spend per home.

Anything like that to guide us going forward.

Yeah, I mean, with regarding the introduction to our installers, we think they will have it up. They would love it because...

Yes, I mean with regarding the introduction Dr. Installers, we think they will wrap it up.

They would love it because solar plus storage plus.

EV charging, you know, infrastructure setting up in your home, they would love that because

EV charging infrastructure setting up.

In your home they would love that because.

I mean with a fully installed, you know, maybe with all installation and EV charger installed, we'll cost you $1,500. And if you couple it with solar plus storage, it might even be lower.

It Ain't that expense.

I mean with the fully in start.

Maybe with all installation and EV charger installed.

Because to your $500.

If you couple it with solar plus storage.

Even be lower.

And there is obviously tax, credit, etc. that there is there. So we think it's a general positive.

And that is.

Obviously tax credit et cetera that.

Yes.

So.

We think as a general positive.

And that's why we are excited to introduce it to our installers and distributors and globally as

And that's why we are excited to introduce it to our installers and distributors and globally as well.

got it so i mean really in terms of thinking about the growth it's more about as you said getting the contract man manufacture in place getting the supply chain in place rather than limitations being training installers and attach rates are educating the customer and this is really about getting the manufacturing side in place that's right is a relatively simple product to get installed some education but not terribly come

Got it so.

Really in.

In terms of thinking about the growth it's more about as you said getting the contract manufacturer in place getting the supply chain in place rather than the limitations being training installers and attach.

Attach rates are educating the customer I mean, this is really about just getting the manufacturing site in place that's.

Thats right is it relatively simple product to it and saw that some education, but not terribly complicated and of course, we got to get the secret sauce, right, which is which is make sure that it is comparable to an ensemble system and provides that intelligence.

And of course we got to get the secret sauce right, which is make sure that it is compatible to an ensemble system and provides that intelligence.

homeowner and in terms of you know thinking about the business you you know I don't need to tell you but you can correlate the business directly to the growth of EV so if it's the EV's grow at

To the homeowner and in terms of thinking about the business you.

Don't need to tell you, but you can correlate the business directly to the growth of EV.

The evs grow it.

For example, Kagger, these will grow even faster than them.

40% for example, CAGR this will grow even faster than that.

It's going to be a healthy cagod and we need to get our manufacturing straight. That's why we are moving one-track manufacturing.

And so.

Yes, it's going to be a healthy CAGR and we need to get out of manufacturing strength. That's why we are moving.

Contract manufacturing house.

Okay. Thank you.

Thank you for your questions for today. So I will find out about Montana from Raymond James. Your question?

Thank you our final question for today comes from the line of Montana from Raymond James Your question. Please.

Thanks for taking the question, odd. Just one for me also about Clipper Creek. You mentioned that...

Thanks for taking the question.

Just one from me also about Clipper Creek, you mentioned that.

installer awareness and skill set is not a constraint. But in practical terms, what portion of your existing

Installer awareness and skill set is not a constraint.

In practical terms what.

Portion of your existing.

kind of installation customers are have any historical background in installing.

Kind of installation customers are have any historical background in installing charging equipment in homes is there a number or a percentage that you can provide.

charging equipment in homes. Is there a number or a percentage that you can provide?

Yeah, I wouldn't be able to provide it now, but I would say that there is probably a 20 to 30% overlap. That's my guess.

I wouldn't be able to provide it now, but I would say that there is probably 20% 30% overlap that's my guess.

Okay very good.

And invertedMinders installing is a supply equipment.

Sure.

And bear in mind that installing as the supply of equipment and so they already have the main the main panel open when they are installing solar plus storage and so coming in and installing a piece of equipment on the wall.

And so they already have the main panel open when they're installing solar storage. And so coming in and installing a piece of equipment on the wall and going a conduit and a 40 amps and landing it on a 40 amp circuit is gonna be pretty straightforward.

Growing our <unk> and.

<unk> 98 on a $40 associated with it.

Pretty straightforward it's what.

kind of work that they do already with solo and storage. So I don't see, she would jump in requirement in training or skill set to do that.

Kind of work that they do already with solar and storage so I don't see.

Huge jump in requirement in training or skill set to do that.

Okay I appreciate it.

that you, this does conclude the question and answer session of today's program. I now like to hand the program back to Baudry, Kathan, Doraman, for any further remarks.

Thank you.

Thank you. This does conclude the question and answer session of today's program I'd now like to hand, the program back to Badri, Qatar to Robin for any further remarks.

Thank you for joining us today and for your continued support of NFACE. We look forward to speaking with you again next quarter.

Yes. Thank you for joining us today and for your continued support of Enphase. We look forward to speaking with you again next quarter.

Thank you.

that you ladies and gentlemen, fear participation in today's conference. This does include the program, you may now disconnect, good day.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.