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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-35480
enph-20220630_g1.jpg
Enphase Energy, Inc.
(Exact name of registrant as specified in its charter)
Delaware
20-4645388
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
47281 Bayside Parkway
Fremont, CA 94538
(Address of principal executive offices, including zip code)
(877) 774-7000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.00001 par value per shareENPHNasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an “emerging growth company.” See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No  
As of July 21, 2022, there were 135,457,275 shares of the registrant’s common stock outstanding, $0.00001 par value per share.

Enphase Energy, Inc. | 2022 Form 10-Q | 1


ENPHASE ENERGY, INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022
TABLE OF CONTENTS
 
  Page
    
Enphase Energy, Inc. | 2022 Form 10-Q | 2

PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements (Unaudited)
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)
As of
June 30,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents$495,473 $119,316 
Marketable securities752,328 897,335 
Accounts receivable, net of allowances of $740 and $1,590 at June 30, 2022 and December 31, 2021, respectively
312,451 333,626 
Inventory130,266 74,400 
Prepaid expenses and other assets45,474 37,784 
Total current assets1,735,992 1,462,461 
Property and equipment, net86,778 82,167 
Operating lease, right of use asset, net16,987 14,420 
Intangible assets, net96,887 97,758 
Goodwill197,004 181,254 
Other assets129,153 118,726 
Deferred tax assets, net174,307 122,470 
Total assets$2,437,108 $2,079,256 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$90,398 $113,767 
Accrued liabilities197,919 157,912 
Deferred revenues, current74,067 62,670 
Warranty obligations, current (includes $24,772 and $14,612 measured at fair value at June 30, 2022 and December 31, 2021, respectively)
29,197 19,395 
Debt, current88,429 86,052 
Total current liabilities480,010 439,796 
Long-term liabilities:
Deferred revenues, non-current217,095 187,186 
Warranty obligations, non-current (includes $49,151 and $36,395 measured at fair value at June 30, 2022 and December 31, 2021, respectively)
67,354 53,982 
Other liabilities23,864 16,530 
Debt, non-current1,197,786 951,594 
Total liabilities1,986,109 1,649,088 
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.00001 par value, 300,000 shares authorized; and 135,426 shares and 133,894 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
1 1 
Additional paid-in capital713,473 837,924 
Accumulated deficit(251,230)(405,737)
Accumulated other comprehensive loss(11,245)(2,020)
Total stockholders’ equity450,999 430,168 
Total liabilities and stockholders’ equity$2,437,108 $2,079,256 

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2022 Form 10-Q | 3

ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Net revenues$530,196 $316,057 $971,488 $617,811 
Cost of revenues311,191 188,256 575,510 367,061 
Gross profit219,005 127,801 395,978 250,750 
Operating expenses:
Research and development39,256 22,708 74,975 44,526 
Sales and marketing53,588 25,586 94,932 45,208 
General and administrative32,125 20,107 70,211 40,230 
Total operating expenses124,969 68,401 240,118 129,964 
Income from operations94,036 59,400 155,860 120,786 
Other income (expense), net
Interest income796 98 1,256 171 
Interest expense(2,168)(12,506)(4,904)(19,835)
Other expense, net(456)(633)(2,597)(60)
Loss on partial settlement of convertible notes (13) (56,382)
Total other expense, net(1,828)(13,054)(6,245)(76,106)
Income before income taxes92,208 46,346 149,615 44,680 
Income tax (provision) benefit(15,232)(6,995)(20,818)26,369 
Net income$76,976 $39,351 $128,797 $71,049 
Net income per share:
Basic$0.57 $0.29 $0.96 $0.53 
Diluted$0.54 $0.28 $0.91 $0.49 
Shares used in per share calculation:
Basic135,196 135,094 134,768 133,209 
Diluted143,725 141,533 143,602 144,022 

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2022 Form 10-Q | 4

ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Net income$76,976 $39,351 $128,797 $71,049 
Other comprehensive income (loss):
Foreign currency translation adjustments(2,570)1,284 (2,306)1,490 
Marketable securities
Change in net unrealized loss(1,351) (6,919) 
Less: reclassification adjustment for net losses included in net income    
Net change, net of income tax benefit of $475 and $2,431 for the three and six months ended June 30, 2022, respectively
(1,351) (6,919) 
Comprehensive income$73,055 $40,635 $119,572 $72,539 
    

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2022 Form 10-Q | 5

ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Common stock and paid-in capital
Balance, beginning of period$666,512 $751,689 $837,925 $534,745 
Cumulative-effect adjustment to Additional paid-in capital related to the adoption of ASU 2020-06— — (207,967)— 
Issuance of common stock from exercise of equity awards4,183 3,428 4,587 3,642 
Payment of withholding taxes related to net share settlement of equity awards(5,463)(7,813)(14,807)(16,998)
Equity component of convertible notes issued, net of tax— 8 — 207,970 
Cost of convertible notes hedge related to the convertible notes issued, net of tax— — — (213,322)
Sale of warrants related to the convertible notes issued— — — 220,800 
Equity component of partial settlement of convertible notes— (74)— (966,557)
Cost of reacquired equity component on partial settlement of convertible notes— 62 — 962,176 
Stock-based compensation expense48,242 15,312 93,736 30,156 
Balance, end of period$713,474 $762,612 $713,474 $762,612 
Accumulated deficit
Balance, beginning of period$(328,206)$(19,488)$(405,737)$(51,186)
Cumulative-effect adjustment to accumulated deficit related to the adoption of ASU 2020-06— — 25,710 — 
Net income76,976 39,351 128,797 71,049 
Repurchase of common stock— (200,000)— (200,000)
Balance, end of period$(251,230)$(180,137)$(251,230)$(180,137)
Accumulated other comprehensive income (loss)
Balance, beginning of period$(7,324)$640 $(2,020)$434 
Foreign currency translation adjustments(2,570)1,284 (2,306)1,490 
Change in net unrealized loss on marketable securities, net of tax(1,351)— (6,919)— 
Balance, end of period$(11,245)$1,924 $(11,245)$1,924 
Total stockholders' equity, ending balance
$450,999 $584,399 $450,999 $584,399 

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2022 Form 10-Q | 6

ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
20222021
Cash flows from operating activities:
Net income$128,797 $71,049 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization30,805 13,154 
Provision for doubtful accounts131 271 
Asset impairment1,200  
Non-cash interest expense4,025 19,463 
Loss on partial settlement of convertibles notes 56,382 
Deemed repayment of convertible notes attributable to accreted debt discount (15,585)
Change in fair value of debt securities129 (2,369)
Stock-based compensation100,861 30,156 
Deferred income taxes15,617 (30,127)
Changes in operating assets and liabilities:
Accounts receivable27,546 (98,531)
Inventory(55,866)4,008 
Prepaid expenses and other assets(21,352)(15,194)
Accounts payable, accrued and other liabilities10,228 46,890 
Warranty obligations22,878 14,025 
Deferred revenues38,094 47,909 
Net cash provided by operating activities303,093 141,501 
Cash flows from investing activities:
Purchases of property and equipment(21,066)(26,368)
Investments in private companies (45,000)
Business acquisitions, net of cash acquired(27,680)(55,239)
Purchases of marketable securities(60,061) 
Maturities of marketable securities193,033  
Net cash provided by (used in) investing activities84,226 (126,607)
Cash flows from financing activities:
Issuance of convertible notes, net of issuance costs 1,188,439 
Purchase of convertible note hedges (286,235)
Sale of warrants 220,800 
Principal payments and financing fees on debt (1,422)
Partial repurchase of convertible notes (289,312)
Proceeds from exercise of equity awards and employee stock purchase plan4,587 3,642 
Repurchase of common stock (200,000)
Payment of withholding taxes related to net share settlement of equity awards(14,807)(16,998)
Net cash provided by (used in) financing activities(10,220)618,914 
Effect of exchange rate changes on cash and cash equivalents(942)(926)
Net increase in cash and cash equivalents376,157 632,882 
Cash and cash equivalents—Beginning of period119,316 679,379 
Cash and cash equivalents—End of period$495,473 $1,312,261 
Supplemental cash flow disclosure:
Supplemental disclosures of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable$2,783 $4,175 
Purchases of property and equipment through tenant improvement allowance$748 $ 
Contingent consideration in connection with the acquisition$ $3,596 
See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2022 Form 10-Q | 7

ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.    DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business
Enphase Energy, Inc. (the “Company”) is a global energy technology company. The Company delivers smart, easy-to-use solutions that manage solar generation, storage and communication on one platform. The Company revolutionized the solar industry with its microinverter technology and produces a fully integrated solar-plus-storage solution.
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Unaudited Interim Financial Information
These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary to present fairly the Company’s financial condition, results of operations, comprehensive income, stockholders’ equity and cash flows for the interim periods indicated. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the operating results for the full year.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include revenue recognition, allowance for doubtful accounts, stock-based compensation, deferred compensation arrangements, inventory valuation, accrued warranty obligations, fair value of investments, debt derivatives, convertible notes and contingent consideration, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, incremental borrowing rate for right-of-use assets and lease liability. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from those estimates due to risks and uncertainties, including uncertainty in the ongoing semiconductor supply and logistics constraints, and the continuing COVID-19 pandemic.
The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States. The Company filed audited consolidated financial statements, which included all information and notes necessary for such a complete presentation in conjunction with its Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on February 11, 2022 (the “Form 10‑K”).
Summary of Significant Accounting Policies
There have been no changes to the Company’s significant accounting policies as described in Note 2, “Summary of Significant Accounting Policies” of the notes to consolidated financial statements included in Part II, Item 8 of the Form 10-K, other than as a result of the Company’s adoption of the new accounting guidance related to convertible senior notes, effective January 1, 2022, as discussed in “Recently Adopted Accounting Pronouncements” below.
Enphase Energy, Inc. | 2022 Form 10-Q | 8

ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Recently Adopted Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, “Debt - Debt with Conversion and Other Options (subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (subtopic 815-40)” (“ASU 2020-06”), which reduces the number of accounting models in subtopic ASC 470-20 that require separate accounting for embedded conversion features. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. The treasury stock method should no longer be used to calculate diluted net income per share for convertible instruments.
The Company adopted ASU 2020-06 in the annual period beginning January 1, 2022, on a modified retrospective basis. Upon adoption of ASU 2020-06, the Company is no longer required to bifurcate the conversion feature related to the issuance of $575.0 million aggregate principal amount of its 0.0% convertible senior notes due 2028 (the “Notes due 2028”) and $632.5 million aggregate principal amount of its 0.0% convertible senior notes due 2026 (the “Notes due 2026”) in equity. Instead, the Company combined the previously separated equity component with the liability component, which together is now classified as debt, thereby eliminating the subsequent amortization of the debt discount. Similarly, the portion of issuance costs previously allocated to equity was reclassified to the carrying value of debt and amortized over the remaining terms of the convertible senior notes. Accordingly, the Company recorded a net decrease to additional paid-in capital by $207.9 million, net of tax to remove the equity component separately recorded for the conversion features associated with the convertible senior notes and equity component associated with the issuance costs, an increase to the carrying value of its convertible debt instrument by $244.5 million to reflect the full principal amount of the convertible senior notes outstanding net of issuance costs, a decrease to deferred tax liability of $62.3 million, and a decrease to accumulated deficit by $25.7 million, net of tax in the Company’s consolidated balance sheet with no impact on the Company’s consolidated statements of operations.
Also upon adoption of ASU 2020-06, the Company is no longer utilizing the treasury stock method for earnings per share impact for 0.25% convertible senior notes due 2025 (the “Notes due 2025”), the Notes due 2026 and the Notes due 2028 (together, the “Convertible Senior Notes”). Instead, the Company is applying the if-converted method when reporting the number of potentially dilutive shares of common stock as the Company may at its election, settle its Convertible Senior Notes through payment or delivery, as the case may be, in cash, shares of its common stock or a combination of cash and shares of its common stock. Further, the Company under the relevant sections of the indentures, irrevocably may elect to settle principal in cash and any excess in cash or shares of the Company’s common stock for its Convertible Senior Notes. If and when the Company makes such election, there will be no adjustment to the net income and the Company will use the average share price for the period to determine the potential number of shares to be issued based upon assumed conversion to be included in the diluted share count.
Recently Issued Accounting Pronouncements
Not Yet Effective
In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" (“ASU 2021-08”). ASU 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, “Revenue from Contracts with Customers,” as if it had originated the contracts. ASU 2021-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is permitted. The Company does not expect the adoption of ASU 2021-08 to have a significant impact on its condensed consolidated financial statements and plans to adopt the standard effective January 1, 2023.
Enphase Energy, Inc. | 2022 Form 10-Q | 9

ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2.    REVENUE RECOGNITION
Disaggregated Revenue
The Company has one major business activity, which is the design, manufacture and sale of solutions for the solar photovoltaic (“PV”) industry. Disaggregated revenue by primary geographical market and timing of revenue recognition for the Company’s single product line are as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
(In thousands)
Primary geographical markets:
U.S.$422,628 $254,576 $792,120 $502,358 
International107,568 61,481 179,368 115,453 
Total$530,196 $316,057 $971,488 $617,811 
Timing of revenue recognition:
Products delivered at a point in time$511,865 $302,100 $936,014 $590,971 
Products and services delivered over time18,331 13,957 35,474 26,840 
Total$530,196 $316,057 $971,488 $617,811 
Contract Balances
Receivables, and contract assets and contract liabilities from contracts with customers, are as follows:
June 30,
2022
December 31,
2021
(In thousands)
Receivables$312,451 $333,626 
Short-term contract assets (Prepaid expenses and other assets)26,537 23,508 
Long-term contract assets (Other assets)78,139 69,583 
Short-term contract liabilities (Deferred revenues, current)74,067 62,670 
Long-term contract liabilities (Deferred revenues, non-current)217,095 187,186 
The Company receives payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include deferred product costs and commissions associated with the deferred revenue and will be amortized along with the associated revenue. The Company had no asset impairment charges related to contract assets in the six months ended June 30, 2022.
Significant changes in the balances of contract assets (prepaid expenses and other assets) as of June 30, 2022 are as follows (in thousands):
Contract Assets
Contract Assets, beginning of period$93,091 
Amount recognized(13,156)
Increase24,741 
Contract Assets, end of period$104,676 
Contract liabilities are recorded as deferred revenue on the accompanying condensed consolidated balance sheets and include payments received in advance of performance obligations under the contract and are realized when the associated revenue is recognized under the contract.
Enphase Energy, Inc. | 2022 Form 10-Q | 10

ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Significant changes in the balances of contract liabilities (deferred revenues) as of June 30, 2022 are as follows (in thousands):
Contract Liabilities
Contract Liabilities, beginning of period$249,856 
Revenue recognized(35,474)
Increase due to billings76,780 
Contract Liabilities, end of period$291,162 
Remaining Performance Obligations
Estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period are as follows:
June 30,
2022
(In thousands)
Fiscal year:
2022 (remaining six months)$38,983 
202368,667 
202462,924 
202555,770 
202640,141 
Thereafter24,677 
Total$291,162 
3.    OTHER FINANCIAL INFORMATION
    Inventory
Inventory consists of the following:
June 30,
2022
December 31,
2021
(In thousands)
Raw materials$25,559 $25,429 
Finished goods104,707 48,971 
Total inventory$130,266 $74,400 
Enphase Energy, Inc. | 2022 Form 10-Q | 11

ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
    Accrued Liabilities
Accrued liabilities consist of the following:
June 30,
2022
December 31,
2021
(In thousands)
Salaries, commissions, incentive compensation and benefits$14,670 $13,062 
Customer rebates and sales incentives116,647 79,038 
Freight17,788 20,522 
Operating lease liabilities, current3,804 3,830 
Liability due to supply agreements12,278 14,653 
Contingent consideration 3,710 
Post combination expense accrual7,585 8,602 
VAT payable10,952 7,231 
Other14,195 7,264 
Total accrued liabilities$197,919 $157,912 
4.    BUSINESS COMBINATIONS
Acquisition of SolarLeadFactory, LLC. (“SolarLeadFactory”)
On March 14, 2022, the Company completed the acquisition of 100% of the shares of SolarLeadFactory, a privately-held company. SolarLeadFactory provides high quality leads to solar installers. As part of the purchase price, the Company paid approximately $26.1 million in cash on March 14, 2022.
The acquisition has been accounted for as a business combination under the acquisition method, and accordingly, the total purchase price is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values on the acquisition date.
In addition to the purchase price summarized above, the Company will be obligated to issue up to approximately $10.0 million in shares of common stock of the Company payable in the second quarter of 2023, subject to achievement of certain operational targets. As the additional payments require continuous employment of certain key employees of SolarLeadFactory and are subject to other conditions, these payments are being accounted for as post-combination expense and will be recognized ratably over the one-year period presuming conditions will be met.
The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date, which are subject to change within the measurement period as the fair value assessments are finalized (in thousands):
Cash and cash equivalents$1,426 
Net tangible assets acquired813 
Intangible assets11,200 
Goodwill12,612 
Net assets acquired$26,051 
The excess of the consideration paid over the fair values assigned to the assets acquired and liabilities assumed represents the goodwill resulting from the acquisition. Goodwill is primarily attributable to expected synergies in the Company’s solar offerings and cross-selling opportunities. The entire goodwill amount is expected to be deductible for U.S. federal income tax purposes over 15 years.
Enphase Energy, Inc. | 2022 Form 10-Q | 12

ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Intangible assets consist primarily of developed technology and customer relationships. Developed technology intangible attributable to developed technology includes a combination of unpatented technology, trade secrets, computer software and research processes that represent the foundation for the existing and planned new products to facilitate the generation of new content. Customer relationships intangible relates to SolarLeadFactory’s ability to sell current and future offerings, as well as products built around the current offering, to its existing customers.
The following table shows the fair value of the separately identifiable intangible assets at the time of acquisition and the period over which each intangible asset will be amortized:
Preliminary Fair ValueUseful Life
(In thousands)(Years)
Developed technology$3,600 5
Customer relationships7,600 5
Total identifiable intangible assets$11,200 
Pro forma financial information has not been presented for the SolarLeadFactory acquisition as the impact to the Company’s condensed consolidated financial statements was not material.
The Company incurred and accrued costs related to acquisition of $0.4 million that were recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations for the six months ended June 30, 2022.
5.    GOODWILL AND INTANGIBLE ASSETS
The Company’s goodwill as of June 30, 2022 and December 31, 2021 are as follows:
GoodwillJune 30,
2022
December 31,
2021
(In thousands)
Goodwill, beginning of period$181,254 $24,783 
Goodwill acquired16,378 156,390 
Currency translation adjustment(628)81 
Goodwill, end of period$197,004 $181,254 
The Company’s purchased intangible assets as of June 30, 2022 and December 31, 2021 are as follows:
June 30, 2022December 31, 2021
GrossAdditionsAccumulated AmortizationNetGrossAdditionsAccumulated AmortizationNet
(In thousands)
Intangible assets:
Other indefinite-lived intangibles$286 $— $— $286 $286 $— $— $286 
Intangible assets with finite lives:
Developed technology38,650 3,600 (12,834)29,416 13,100 25,550 (8,958)29,692 
Customer relationships41,021 7,600 (15,273)33,348 26,421 14,600 (11,448)29,573 
Trade names37,700  (3,863)33,837  37,700 (93)37,607 
Order backlog600  (600)  600  600 
Total purchased intangible assets$118,257 $11,200 $(32,570)$96,887 $39,807 $78,450 $(20,499)$97,758 
Enphase Energy, Inc. | 2022 Form 10-Q | 13

ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Amortization expense related to finite-lived intangible assets are as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
(In thousands)
Developed technology$2,010 $891 $3,876 $1,690 
Customer relationships
2,067 1,532 3,825 2,462 
Trade names1,885 85 3,770 147 
Order backlog323  600  
Total amortization expense
$6,285 $2,508 $12,071 $4,299 
Amortization of developed technology is recorded to cost of sales and customer relationships and trade names is recorded to sales and marketing expense.
The expected future amortization expense of intangible assets as of June 30, 2022 is presented below (in thousands):
June 30,
2022
Fiscal year:
2022 (remaining six months)$11,926 
202324,096 
202421,299 
202519,984 
202616,425 
Thereafter2,871 
Total$96,601 
Enphase Energy, Inc. | 2022 Form 10-Q | 14

ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6.    CASH EQUIVALENTS AND MARKETABLE SECURITIES
The cash equivalents and marketable securities consist of the following:
As of June 30, 2022
Amortized CostGross Unrealized GainsGross Unrealized LossesFair ValueCash EquivalentsMarketable Securities
(In thousands)
Money market funds$432,946 $ $ $432,946 $432,946 $ 
Certificates of Deposit3,126  (24)