Phase Space AI

Financial Model Notes

Enphase Energy [ENPH]

Enphase Energy [ENPH] — Financial Model Notes

Model version 1.0. First build. Every figure re-derived from SEC EDGAR XBRL and the filed statements; no vendor pre-computed field and no screen field was adopted. Units $m unless stated.

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1. The one structural decision in this model

The income statement is built twice: as reported, and on a product basis. Everything else follows from that. A single presentation cannot carry both, because Section 45X is recognised inside cost of revenues, so reported gross margin and reported operating margin are blends of a unit economic and a statutory transfer. The company's own MD&A supplies the bridge in percentage points, which means the split is a disclosure, not an estimate.

The product line removes exactly two items and nothing else: 1. the AMPTC benefit recognised in cost of revenues (company-disclosed), and 2. the IEEPA tariff refund recognised in cost of revenues (company-disclosed, and 96% of it relates to prior periods).

Stock-based compensation, restructuring and acquisition amortisation are left in. This is a GAAP-product view, not a non-GAAP view.

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2. Revenue build

Quarterly RevenueFromContractWithCustomerExcludingAssessedTax, keyed on the fact's own period-end (never on the fy field — that is the documented EDGAR bug that repeats prior-year comparatives under the current filing's label).

Annual revenue is not tagged directly; it is GrossProfit + CostOfRevenue for each fiscal year, which reconciles to the filed statements:

Screen's revenue_ttm of 1,399.801 reconciles as FY2025 1,472.985 − Q1-2025 356.084 + Q1-2026 282.900 = 1,399.801. The screen's arithmetic was correct; only its basis date was stale. Worth recording, because it is a different defect from the confident-wrong-number class and should be logged differently.

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3. The product-basis income statement

3.1 Annual

n.d. = not disclosed. The FY2025 10-K's AMPTC note gives FY2025 and FY2024 only. FY2023 is left blank. No estimate is substituted, and the FY2023 product margin is therefore unknown, not zero.

Cross-check on the product gross margin. The company states the AMPTC was worth 16.2pp of FY2025 gross margin and 11.8pp of FY2024. 16.2% × 1,472.985 = 238.6 against the disclosed 238.7; 11.8% × 1,330.383 = 157.0 against the disclosed 157.5. Both tie to within 0.3%. The two disclosures are independent and they agree, which is the strongest available evidence that the split is right.

3.2 Quarterly, most recent two

¹ Q1-2026 net AMPTC benefit derived as the six-month figure ($100.609m) less Q2-2026 ($64.922m) = $35.687m. The six-month figure is net of an $18.905m loss on the sale of 2025-vintage credits; the gross fair value of AMPTC generated in the half was $119.514m, of which Q2 was $64.922m.

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4. AMPTC schedule — the model's most important table

TTM is computed on the gross fair value of AMPTC generated basis (FY2025 238.700 − 1H-2025 114.671 + 1H-2026 119.514 = 243.543), which is the correct base for a margin decomposition. The $18.905m loss on selling the prior-year vintage is a separate charge and is not double-counted.

Statutory forward schedule. 11¢/W-AC through 2029; 2030 at 75% (8.25¢), 2031 at 50% (5.5¢), 2032 at 25% (2.75¢), zero from 2033. Any model whose terminal year is 2031 or later must scale or eliminate this line. The screen's terminal_margin: 0.107 does neither.

Balance-sheet location. At 2025-12-31: $227.5m recorded as prepaid income tax (within Prepaid expenses and other assets) plus $11.2m as a reduction of income tax payable. At 2026-06-30, Prepaid expenses and other current assets is $454.2m. Approximately half of that line is a receivable from the US Treasury.

Tax effect. Non-taxable, so it also produces a permanent tax benefit: FY2025 rate reconciliation shows $(50.132)m / (24.5)% for "Non-taxable income related to Section 45X tax credits." A deferred tax liability of $(5.914)m is carried for the "State impact of Section 45X tax credits." Any ex-45X net-income bridge must remove the $50.1m tax benefit as well as the operating benefit.

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5. Safe-harbour revenue schedule

Contracted programme total, year to date: $1,080m — $202.4m under the 5% ITC Safe Harbor and $878.6m under the Physical Work Test. Neither figure is XBRL-tagged; both come from the Q2-2026 press release.

How the model treats it. Safe-harbour revenue is modelled as a finite pool that depletes, not as a run-rate. The pool is the $1,080m of executed agreements less what has already shipped ($34.5m + $84.3m = $118.8m), so roughly $961m remains — but the §48E placed-in-service deadline of 2027-12-31 caps how long it can convert, and the §48E begin-construction window closed 2026-07-04, so no further pool can be created under that provision.

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6. Balance sheet and net cash

Net cash, three conventions. Report the basis, always:

Debt is one instrument. 0.0% convertible senior notes due 2028-03-01, $575.0m principal, $2.164m unamortised issuance costs, carrying $572.836m. Fair value at 2026-06-30: $534.750m (Level 2). Conversion rate 3.5104 shares per $1,000, i.e. a $284.87 conversion price. Not convertible at holder option as of 2026-06-30 (the $370.33 / 130% trigger was not met), so classified non-current. A convertible-note hedge covers ~2.0m shares; 2028 Warrants were sold at a $397.91 strike for $123.4m of proceeds. At $35.05 the converts are a cash liability, not a dilution source.

The 2026 notes ($632.5m) were settled in cash on 2026-03-02 with no shares issued.

Operating leases: ROU asset $35.720m; liabilities $9.103m current (within accrued liabilities) and $31.426m non-current (within other liabilities), total $40.529m. Weighted average remaining term 5.1 years, discount rate 6.2%.

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7. Share count and dilution

Net change over eighteen months: −0.2%. $129.957m of buybacks in 1H-2025; none in 1H-2026. Withholding-tax payments on net share settlement of $21.226m in 1H-2026. Unrecognised SBC $259.7m over a 2.2-year weighted average.

Enphase has not funded losses with equity. Within this cluster that is the exception, and it means per-share economics track company economics one for one. Revenue per share: TTM $10.05 against FY2022's $17.59 — the decline is entirely operational, none of it dilutive.

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8. Cash flow

Q2-2026 free cash flow $25.9m (operating $40.3m less capex $14.4m). The company is cash-generative because §45X converts to cash — the credit is now transferable at 93 cents, so it is a hard cash item. That is the strongest fact in the bull case and it has a 2032 expiry attached to it.

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9. Unit economics, where disclosed

Manufacturing capacity is ~5m microinverters per quarter across the in-house facility and the Flex partnership. Q2-2026 shipped 1.58m from those facilities: ≈32% utilisation, which the company names as "unfavorable absorption of fixed manufacturing and supply chain costs over a lower revenue base." Cumulative microinverters shipped: ~85m.

The AMPTC-per-MW figure ($98.1k/MW-DC) is the single most useful modelling coefficient in the name: it converts a shipment forecast directly into a subsidy forecast, and multiplying it by the statutory 2030/2031/2032 step- downs gives the subsidy cliff in dollars.

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10. Integrity checks run

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11. What this model does not contain

• No consensus estimates. Alpha Vantage's shared 25/day quota was not spent. Consensus Criteria is INDETERMINATE and blocks nothing.
• No Street price target. Requires a paid feed; not asserted.
• No beta regression. WACC is the house 10.0% held constant across the cluster so the three names are comparable to each other; it is not a regressed cost of capital for Enphase specifically.
• No FY2023 product margin. The disclosure does not exist.
• No transcript mention counts. Substituted with filing-text counts, with the substitution declared.
• No 13F ownership table. There is no single EDGAR endpoint for holders of a given issuer, and a partial table would be presented as complete.