Enphase Energy, Inc. (NASDAQ: ENPH) shares dropped in after-hours trading on Tuesday. The solar equipment maker reported a sequential decline in quarterly revenue and margins. Therefore, as a result, the stock has trended lower over the past year. This happened amid soft residential solar demand and inventory corrections in key markets.
Fourth-Quarter Performance
Enphase reported Q4 2025 revenue of $343.3 million. This marked a drop from $410.4 million in Q3 and $382.7 million a year earlier. The company shipped 1.55 million microinverters, equaling 682.6 megawatts DC. Additionally, it shipped 150.1 megawatt hours of IQ Batteries. GAAP gross margin hit 44.3%, while non-GAAP gross margin reached 46.1%. These figures compared to 49.2% in the prior quarter.
Management noted that reciprocal tariffs cut margins by 5.1 percentage points. GAAP operating income fell to $22.4 million from $66.2 million previously. Non-GAAP operating income dropped to $79.4 million from $123.4 million. GAAP net income stood at $38.7 million, or $0.29 per diluted share. Meanwhile, non-GAAP net income was $93.4 million, or $0.71 per diluted share.
Regional Trends and Demand
U.S. revenue declined 13% quarter over quarter. This stemmed mainly from lower safe harbor and storage revenue. European revenue fell 29%, as demand stayed soft. However, U.S. sell-through demand rose 21% sequentially. It reached its highest level in over two years. Installers drove this surge ahead of the Section 25D tax credit expiration. As a result, channel inventories normalized.
Full-Year Results
For fiscal 2025, Enphase achieved revenue of $1.47 billion. This rose from $1.33 billion in 2024. GAAP net income climbed to $172.1 million from $102.7 million. Non-GAAP net income increased to $389.8 million. The company ended the year with $1.51 billion in cash, cash equivalents, and marketable securities.
Outlook and Analyst Actions
Enphase forecasts Q1 2026 revenue at $270 million to $300 million. This includes about $35 million in safe harbor shipments. Non-GAAP gross margin will range from 42% to 45%. On the results day, analysts announced no upgrades, downgrades, or price-target changes.
