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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 September 30, 2024
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
enpha15.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)
(707) 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 October 18, 2024, there were 135,106,623 shares of the registrant’s common stock outstanding, $0.00001 par value per share.

Enphase Energy, Inc. | 2024 Form 10-Q | 1

ENPHASE ENERGY, INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024
TABLE OF CONTENTS
Page

Enphase Energy, Inc. | 2024 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)
As of
September 30,
2024		December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents$256,325 $288,748 
Marketable securities1,510,299 1,406,286 
Accounts receivable, net of allowances of $6,213 and $2,502 at September 30, 2024 and December 31, 2023, respectively
232,225 445,959 
Inventory158,837 213,595 
Prepaid expenses and other assets203,195 88,930 
Total current assets2,360,881 2,443,518 
Property and equipment, net148,444 168,244 
Operating lease, right of use asset, net28,120 19,887 
Intangible assets, net51,152 68,536 
Goodwill214,292 214,562 
Other assets185,448 215,895 
Deferred tax assets, net275,854 252,370 
Total assets$3,264,191 $3,383,012 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$112,417 $116,164 
Accrued liabilities189,819 261,919 
Deferred revenues, current129,556 118,300 
Warranty obligations, current35,755 36,066 
Debt, current99,931 — 
Total current liabilities567,478 532,449 
Long-term liabilities:
Deferred revenues, non-current354,210 369,172 
Warranty obligations, non-current148,477 153,021 
Other liabilities62,392 51,008 
Debt, non-current1,200,261 1,293,738 
Total liabilities2,332,818 2,399,388 
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.00001 par value, 300,000 shares authorized; and 135,084 shares and 135,722 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
1 1 
Additional paid-in capital1,033,036 939,338 
Accumulated earnings (deficit)(104,927)46,273 
Accumulated other comprehensive income (loss)3,263 (1,988)
Total stockholders’ equity931,373 983,624 
Total liabilities and stockholders’ equity$3,264,191 $3,383,012 

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2024 Form 10-Q | 3
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Net revenues$380,873 $551,082 $947,670 $1,988,216 
Cost of revenues202,702 289,069 516,825 1,076,490 
Gross profit178,171 262,013 430,845 911,726 
Operating expenses:
Research and development47,843 54,873 150,925 172,045 
Sales and marketing49,671 55,357 154,753 178,383 
General and administrative30,192 33,794 98,924 104,456 
Restructuring and asset impairment charges677 — 3,755 870 
Total operating expenses128,383 144,024 408,357 455,754 
Income from operations49,788 117,989 22,488 455,972 
Other income, net
Interest income19,977 19,669 58,889 49,235 
Interest expense(2,237)(2,196)(6,653)(6,571)
Other income (expense), net(16,785)1,883 (24,264)2,276 
Total other income, net955 19,356 27,972 44,940 
Income before income taxes50,743 137,345 50,460 500,912 
Income tax provision(4,981)(23,392)(9,962)(82,895)
Net income $45,762 $113,953 $40,498 $418,017 
Net income per share
Basic$0.34 $0.84 $0.30 $3.06 
Diluted$0.33 $0.80 $0.30 $2.92 
Shares used in per share calculation:
Basic135,329 136,165 135,621 136,491 
Diluted139,914 143,863 136,236 145,081 

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2024 Form 10-Q | 4
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Net income $45,762 $113,953 $40,498 $418,017 
Other comprehensive income:
Foreign currency translation adjustments4,356 (3,742)698 (2,234)
Marketable securities
Change in net unrealized gain, net of income tax provision of $2,286 and $1,517 for the three and nine months ended September 30, 2024, respectively, and $293 and $1,179 for the three and nine months ended September 30, 2023, respectively.
6,858 832 4,553 3,354 
Comprehensive income $56,976 $111,043 $45,749 $419,137 
    

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2024 Form 10-Q | 5
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Common stock and paid-in capital
Balance, beginning of period$993,369 $858,040 $939,339 $819,120 
Issuance of common stock from exercise of equity awards14 719 7,969 1,315 
Issuance of common stock related to 365 Pronto, Inc. post combination expense— — — 10,307 
Payment of withholding taxes related to net share settlement of equity awards(6,286)(8,465)(73,801)(93,100)
Settlement of convertible notes due 2023— 5,000 — 5,000 
Stock-based compensation expense45,940 43,814 159,530 156,466 
Balance, end of period$1,033,037 $899,108 $1,033,037 $899,108 
Treasury stock, at cost
Balance, beginning of period$— $(68,140)$— $— 
Purchases of treasury stock, at cost— — — (68,140)
Treasury stock retired and reclassed to accumulated earnings— 68,140 — 68,140 
Balance, end of period$— $— $— $— 
Accumulated earnings (deficit)
Balance, beginning of period$(100,895)$189,539 $46,273 $17,335 
Treasury stock retired and reclassed to accumulated earnings— (68,140)— (68,140)
Repurchase of common stock(49,794)(110,000)(191,698)(241,860)
Net income 45,762 113,953 40,498 418,017 
Balance, end of period$(104,927)$125,352 $(104,927)$125,352 
Accumulated other comprehensive income (loss)
Balance, beginning of period$(7,951)$(6,852)$(1,988)$(10,882)
Foreign currency translation adjustments4,356 (3,742)698 (2,234)
Change in net unrealized gain on marketable securities, net of tax6,858 832 4,553 3,354 
Balance, end of period$3,263 $(9,762)$3,263 $(9,762)
Total stockholders' equity, ending balance
$931,373 $1,014,698 $931,373 $1,014,698 

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2024 Form 10-Q | 6
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
20242023
Cash flows from operating activities:
Net income $40,498 $418,017 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization60,724 53,867 
Net accretion of discount on marketable securities(1,109)(12,611)
Provision for doubtful accounts4,471 1,282 
Asset impairment24,141 903 
Non-cash interest expense6,462 6,254 
Net loss (gain) from change in fair value of debt securities1,730 (5,408)
Stock-based compensation159,530 157,635 
Deferred income taxes(27,644)(38,295)
Changes in operating assets and liabilities:
Accounts receivable208,956 (118,249)
Inventory54,758 (24,406)
Prepaid expenses and other assets(117,856)(57,376)
Accounts payable, accrued and other liabilities(58,140)117,128 
Warranty obligations(4,855)57,420 
Deferred revenues(5,265)105,169 
Net cash provided by operating activities346,401 661,330 
Cash flows from investing activities:
Purchases of property and equipment(25,540)(90,326)
Investments in private companies— (15,000)
Purchases of marketable securities(1,091,511)(1,743,674)
Maturities and sale of marketable securities994,677 1,406,608 
Net cash used in investing activities(122,374)(442,392)
Cash flows from financing activities:
Partial settlement of convertible notes(7)— 
Proceeds from issuance of common stock under employee equity plans7,969 1,315 
Payment of withholding taxes related to net share settlement of equity awards(73,801)(93,100)
Repurchase of common stock(191,698)(310,000)
Net cash used in financing activities(257,537)(401,785)
Effect of exchange rate changes on cash and cash equivalents1,087 (322)
Net decrease in cash and cash equivalents(32,423)(183,169)
Cash and cash equivalents—Beginning of period288,748 473,244 
Cash and cash equivalents—End of period$256,325 $290,075 
Supplemental cash flow disclosure:
Supplemental disclosures of non-cash investing activities:
Purchases of property and equipment included in accounts payable$5,722 $16,183 

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2024 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’s intelligent microinverters work with virtually every solar panel made, and when paired with the Company’s smart technology, results in one of the industry’s best-performing clean energy systems.
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“U.S. 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 nine months ended September 30, 2024 are not necessarily indicative of the operating results for the full year.
Use of Estimates
The preparation of financial statements in conformity with U.S. 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, income tax provision, inventory valuation, government grants, accrued warranty obligations, fair value of investments, convertible notes, 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 logistic constraints.
The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. 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, 2023 filed with the SEC on February 9, 2024 (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.
Enphase Energy, Inc. | 2024 Form 10-Q | 8
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Recently Issued Accounting Pronouncements
Not Yet Adopted
In November 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 requires additional disclosures for segment reporting, including disclosure of the title and position of the Chief Operating Decision Maker and requires a public entity that has a single reportable segment to provide all the disclosures required by the amendments in ASU 2023-07, and all existing segment disclosures in Topic 280. ASU 2023-07 is effective for fiscal periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company plans to adopt ASU 2023-07 effective for the annual report on Form 10-K for the year ending December 31, 2024 and subsequent interim periods. Since ASU 2023-07 addresses only disclosures, the adoption of ASU 2023-07 is not expected to have a significant impact on its consolidated financial statements.
Not Yet Effective
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold, certain disclosures of state versus federal income tax expenses and taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company does not expect the adoption of ASU 2023-09 to have a significant impact on its consolidated financial statements and will adopt the standard effective January 1, 2025.
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 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
September 30,		Nine Months Ended
September 30,
2024202320242023
(In thousands)
Primary geographical markets:
United States$284,033 $350,447 $632,719 $1,240,990 
International96,840 200,635 314,951 747,226 
Total$380,873 $551,082 $947,670 $1,988,216 
Timing of revenue recognition:
Products delivered at a point in time$348,669 $522,419 $854,406 $1,908,193 
Products and services delivered over time32,204 28,663 93,264 80,023 
Total$380,873 $551,082 $947,670 $1,988,216 
Enphase Energy, Inc. | 2024 Form 10-Q | 9
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Contract Balances
Accounts receivables, and contract assets and contract liabilities from contracts with customers, are as follows:
September 30,
2024		December 31,
2023
(In thousands)
Accounts receivables$232,225 $445,959 
Short-term contract assets (Prepaid expenses and other assets)42,582 40,241 
Long-term contract assets (Other assets)117,457 124,190 
Short-term contract liabilities (Deferred revenues, current)129,556 118,300 
Long-term contract liabilities (Deferred revenues, non-current)354,210 369,172 
The Company receives payments from customers based upon contractual billing schedules. Accounts receivables are recorded in an amount that reflects the consideration that is expected to be received in exchange for those goods or services when the right to consideration becomes unconditional. The Company maintains allowances for doubtful accounts for uncollectible accounts receivable. Management estimates anticipated credit losses from doubtful accounts based on days past due, customer specific experience, collection history, the financial health of customers including from the impacts of the broad-based slowdown in solar industry beginning in the second quarter of 2023 in the United States and in the third quarter of 2023 in Europe, among other factors. Accounts receivables are recorded net of allowance for doubtful accounts totaling $6.2 million and $2.5 million as of September 30, 2024 and December 31, 2023, respectively. The $6.2 million allowance for doubtful accounts as of September 30, 2024 includes $4.8 million which relates to a customer that filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code (“Chapter 11 bankruptcy”) during the three months ended September 30, 2024. Management will continue to monitor certain customers experiencing considerable financial difficulties as more information is publicly available to perform collectability assessment and evaluate the impact to the Company's revenue recognition and allowance for doubtful accounts on its financial statements.
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 for the nine months ended September 30, 2024.
Significant changes in the balances of contract assets (prepaid expenses and other assets) as of September 30, 2024 are as follows (in thousands):
Contract Assets
Contract Assets, beginning of period$164,431 
Amount recognized(32,336)
Increased due to billings27,944 
Contract Assets, end of period$160,039 
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.
Significant changes in the balances of contract liabilities (deferred revenues) as of September 30, 2024 are as follows (in thousands):
Contract Liabilities
Contract Liabilities, beginning of period$487,472 
Revenue recognized(93,265)
Increased due to billings89,559 
Contract Liabilities, end of period$483,766 
Enphase Energy, Inc. | 2024 Form 10-Q | 10
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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:
September 30,
2024
(In thousands)
Fiscal year:
2024 (remaining three months)$35,112 
2025124,071 
2026106,829 
202787,140 
202865,775 
Thereafter64,839 
Total$483,766 
3.    OTHER FINANCIAL INFORMATION
Inventory
Inventory consists of the following:
September 30,
2024		December 31,
2023
(In thousands)
Raw materials$26,369 $30,849 
Finished goods132,468 182,746 
Total inventory$158,837 $213,595 
Accrued Liabilities
Accrued liabilities consist of the following:
September 30,
2024		December 31,
2023
(In thousands)
Customer rebates and sales incentives$74,798 $158,338 
Liability due to supply agreements47,544 32,973 
Freight10,252 19,262 
Salaries, commissions, incentive compensation and benefits12,072 10,316 
Income tax payable2,187 8,531 
Operating lease liabilities, current6,320 5,220 
VAT payable4,201 3,243 
Liabilities related to restructuring accruals630 3,104 
Other31,815 20,932 
Total accrued liabilities$189,819 $261,919 
Enphase Energy, Inc. | 2024 Form 10-Q | 11
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4.    GOODWILL AND INTANGIBLE ASSETS
The Company’s goodwill as of September 30, 2024 and December 31, 2023 was as follows:
GoodwillSeptember 30,
2024		December 31,
2023
(In thousands)
Goodwill, beginning of period$214,562 $213,559 
Currency translation adjustment(270)1,003 
Goodwill, end of period$214,292 $214,562 
The Company’s purchased intangible assets as of September 30, 2024 and December 31, 2023 were as follows:
September 30, 2024December 31, 2023
GrossAccumulated AmortizationNetGrossAccumulated AmortizationImpairmentNet
(In thousands)
Intangible assets:
Other indefinite-lived intangibles$286 $— $286 $286 $— $— $286 
Intangible assets with finite lives:
 Developed technology51,054 (34,118)16,936 51,044 (27,093)— 23,951 
 Customer relationships51,306 (34,248)17,058 55,106 (29,527)(3,807)21,772 
 Trade names37,700 (20,828)16,872 37,700 (15,173)— 22,527 
Total purchased intangible assets$140,346 $(89,194)$51,152 $144,136 $(71,793)$(3,807)$68,536 
During the nine months ended September 30, 2024, intangible assets increased by less than $0.1 million due to the impact of foreign currency translation.
Amortization expense related to finite-lived intangible assets were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(In thousands)
Developed technology$2,100 $2,456 $7,025 $7,366 
Customer relationships
1,578 2,456 4,721 7,364 
Trade names1,885 1,885 5,655 5,655 
Total amortization expense
$5,563 $6,797 $17,401 $20,385 
Amortization of developed technology is recorded to cost of revenues, amortization of customer relationships and trade names are recorded to sales and marketing expense, and amortization of certain customer relationships is recorded as a reduction to revenue.
Finite-lived intangible assets are tested for impairment whenever an event occurs or circumstances indicate that the carrying amount of an asset (asset group) may not be recoverable. An impairment loss is recognized when the carrying amount of an asset group exceeds the estimated undiscounted cash flows. As of September 30, 2024, the balance of customer intangible relationship assets is $17.1 million, which includes $7.6 million related to one customer that filed for Chapter 11 bankruptcy during the three months ended September 30, 2024. Management has evaluated that the carrying amount of that asset as of September 30, 2024 is recoverable and will continue to evaluate the impacts on its financial statements as more information is publicly available.
Enphase Energy, Inc. | 2024 Form 10-Q | 12
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The expected future amortization expense of intangible assets as of September 30, 2024 is presented below:
September 30,
2024
(In thousands)
Fiscal year:
2024 (remaining three months)$5,373 
202521,479 
202619,190 
20274,824 
Total$50,866 
5.    CASH EQUIVALENTS AND MARKETABLE SECURITIES
The cash equivalents and marketable securities consist of the following:
As of September 30, 2024
Amortized CostGross Unrealized GainsGross Unrealized LossesFair ValueCash EquivalentsMarketable Securities
(In thousands)
Money market funds$94,245 $— $— $94,245 $94,245 $— 
Certificates of deposit26,356 19 — 26,375 — 26,375 
Commercial paper77,139 101 (1)77,239 23,914 53,325 
Corporate notes and bonds456,985 2,807 (145)459,647 — 459,647 
U.S. Treasuries222,450 151 (16)222,585 — 222,585 
U.S. Government agency securities745,569 3,018 (220)748,367 — 748,367 
Total$1,622,744 $6,096 $(382)$1,628,458 $118,159 $1,510,299 
As of December 31, 2023
Amortized CostGross Unrealized GainsGross Unrealized LossesFair ValueCash EquivalentsMarketable Securities
(In thousands)
Money market funds$132,037 $— $— $132,037 $132,037 $— 
Certificates of deposit55,863 58 (9)55,912 750 55,162 
Commercial paper71,427 29 (19)71,437 1,694 69,743 
Corporate notes and bonds406,093 934 (931)406,096 462 405,634 
U.S. Treasuries327,773 152 (34)327,891 — 327,891 
U.S. Government agency securities548,391 690 (1,225)547,856 — 547,856 
Total$1,541,584 $1,863 $(2,218)$1,541,229 $134,943 $1,406,286 
The following table summarizes the contractual maturities of the Company’s cash equivalents and marketable securities as of September 30, 2024:
Amortized CostFair Value
(In thousands)
Due within one year$1,108,638 $1,110,185 
Due within one to three years514,106 518,273 
Total$1,622,744 $1,628,458 
Enphase Energy, Inc. | 2024 Form 10-Q | 13
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
All available-for-sale securities have been classified as current, based on management's intent and ability to use the funds in current operations.
6.    WARRANTY OBLIGATIONS
The Company’s warranty obligation activities were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(In thousands)
Warranty obligations, beginning of period$177,179 $180,715 $189,087 $131,446 
Accruals for warranties issued during period7,763 12,477 20,285 44,992 
Expense (benefit) from changes in estimates4,584 (1,983)(8,052)(8,618)
Settlements(6,615)(6,283)(21,114)(20,269)
Increase due to accretion expense2,649 3,157 8,244 10,609 
Change in discount rate(1)
— 2,811 759 34,608 
Other(1,328)(2,028)(4,977)(3,902)
Warranty obligations, end of period184,232 188,866 184,232 188,866 
Less: warranty obligations, current(35,755)(40,750)(35,755)(40,750)
Warranty obligations, non-current$148,477 $148,116 $148,477 $148,116 
(1)    Refer to Note 7, “Fair Value Measurements” for additional information about the monetary impact for change in the discount rate.
Enphase Energy, Inc. | 2024 Form 10-Q | 14
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Changes in Estimates
In the three months ended September 30, 2024, the Company recorded $4.6 million in warranty expense from changes in estimates, of which $8.4 million related to the Company proactively addressing certain component defects in a specific population of products that did not meet the Company’s high quality standards, $0.5 million related to increasing the warranty term to 20 years for microinverter units sold in Mexico, Columbia, Panama, Costa Rica, and nine Caribbean countries, partially offset by $4.3 million related to a decrease in product replacement costs for Enphase IQ Battery systems and related accessories as the Company expanded its network of field service technicians in the United States to provide direct homeowner assistance. In the three months ended September 30, 2023, the Company recorded $2.0 million in warranty benefit from changes in estimates, of which $9.2 million related to a decrease in product replacement costs for Enphase IQ Battery systems and related accessories as the Company expanded its network of field service technicians in the United States, Europe and Australia to provide direct homeowner assistance. This benefit was partially offset by $6.0 million related to the Company proactively addressing certain component defects in a specific population of products that did not meet the Company’s high quality standards, $0.7 million for continuing analysis of field performance data and diagnostic root-cause failure analysis for prior generation products, as well as $0.5 million related to an increase in product replacement costs for all other products.
In the nine months ended September 30, 2024, the Company recorded $8.1 million in warranty benefit from changes in estimates, of which $15.5 million related to a decrease in product replacement costs primarily associated with Enphase IQ Battery systems and related accessories as the Company expanded its network of field service technicians in the United States, Europe, Australia to provide direct homeowner assistance, and $4.4 million related to continuing analysis of field performance data and diagnostic root-cause failure analysis for early generations of IQ Battery. This benefit was partially offset by $10.2 million related to the Company proactively addressing certain component defects in a specific population of products that did not meet the Company’s high quality standards, $1.1 million for continuing analysis of field performance data and diagnostic root-cause failure analysis for all other products, as well as $0.5 million related to increasing the warranty term to 20 years for microinverter units sold in Mexico, Columbia, Panama, Costa Rica and nine Caribbean countries. In the nine months ended September 30, 2023, the Company recorded $8.6 million in warranty benefit from changes in estimates, of which $29.7 million related to a decrease in product replacement costs related to Enphase IQ Battery systems and accessories as the Company expanded network of field service technicians in the United States, Europe and Australia to provide direct homeowner assistance, and $1.6 million related to a decrease in product replacement costs for all other products. This benefit was partially offset by $11.9 million related to the Company proactively addressing certain component defects in a specific population of products that did not meet the Company's high quality standards, $6.1 million for increasing the warranty period for Enphase IQ Battery from 10 years to 15 years, as well as $4.7 million related to continuing analysis of field performance data and diagnostic root-cause failure analysis primarily for prior generation products.
7.    FAIR VALUE MEASUREMENTS
The accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:
•Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of such assets or liabilities do not entail a significant degree of judgment.
Enphase Energy, Inc. | 2024 Form 10-Q | 15
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
•Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
•Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The following table presents assets and liabilities measured at fair value on a recurring basis using the above input categories:
September 30, 2024December 31, 2023
(In thousands)
Level 1Level 2Level 3Level 1Level 2Level 3
Assets:
Cash and cash equivalents:
Money market funds$94,245 $— $— $132,037 $— $— 
Certificates of deposit— — — 750 — 
Commercial paper— 23,914 — — 1,694 — 
Corporate notes and bonds— — — 462 — 
Marketable securities:
Certificates of deposit— 26,375 — — 55,162 — 
Commercial paper— 53,325 — — 69,743 — 
Corporate notes and bonds— 459,647 — — 405,634 — 
U.S. Treasuries— 222,585 — — 327,891 — 
U.S. Government agency securities— 748,367 — — 547,856 — 
Other assets:
Investments in debt securities— — 61,137 — — 79,855 
Total assets measured at fair value$94,245 $1,534,213 $61,137 $132,037 $1,409,192 $79,855 
Liabilities:
Warranty obligations:
Current$— $— $26,087 $— $— $28,667 
Non-current— — 130,633 — — 133,126 
Total warranty obligations measured at fair value— — 156,720 — — 161,793 
Total liabilities measured at fair value$— $— $156,720 $— $— $161,793 
Notes due 2028, Notes due 2026 and Notes due 2025
The Company carries the Notes due 2028 (as defined in Note 9, “Debt”) and Notes due 2026 (as defined in Note 9, “Debt”) at face value less unamortized debt issuance costs on its condensed consolidated balance sheets. The Company carries the Notes due 2025 (as defined in Note 9, “Debt”) at face value less unamortized debt discount and issuance costs on its condensed consolidated balance sheets. As of September 30, 2024, the fair value of the Notes due 2028, Notes due 2026 and Notes due 2025 was $491.9 million, $588.5 million and $147.1 million, respectively. The fair value as of September 30, 2024 was determined based on the closing trading price per $100 principal amount as of the last day of trading for the period. The Company considers the fair value of the Notes due 2028, Notes due 2026 and Notes due 2025 to be a Level 2 measurement as they are not actively traded.
Equity investments without readily determinable fair value
The Company had previously invested $6.0 million in a privately-held company without readily determinable fair value, which is included in “Other assets” in the condensed consolidated balance sheet as of December 31, 2023. During the nine months ended September 30, 2024, the Company determined that the carrying value of the investment was not recoverable. Accordingly, the Company recorded an impairment charge of $6.0 million within “Other income, net” on the condensed consolidated statement of operations for the nine months September 30, 2024.
Enphase Energy, Inc. | 2024 Form 10-Q | 16
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Investments in debt securities
The Company had previously taken a non-voting participating interest of approximately $15.0 million in a loan held by a privately-held company, which is included in “Other assets” in the condensed consolidated balance sheet as of December 31, 2023. As of September 30, 2024, the Company accreted interest of approximately $2.0 million in “Other income (expense), net” in the condensed consolidated statement of operations. The Company determined that the carrying value of the investment was not recoverable as the privately-held company filed for Chapter 11 bankruptcy during the three months ended September 30, 2024. Accordingly, the Company recorded an impairment charge of $17.0 million within “Other income, net” on the condensed consolidated statement of operations for the three and nine months ended September 30, 2024.
Investment in debt securities is recorded in “Other assets” on the accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023. The changes in the balance in investments in debt securities during the period were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(In thousands)
Balance at beginning of period$78,866 $60,275 $79,855 $56,777 
Investment— 15,000 — 15,000 
Fair value adjustments included in other income, net(741)1,910 (1,730)5,408 
Impairment (16,988)— (16,988)— 
Balance at end of period$61,137 $77,185 $61,137 $77,185 
Warranty obligations
Fair Value Option for Warranty Obligations Related to Products Sold Since January 1, 2014
The Company estimates the fair value of warranty obligations by calculating the warranty obligations in the same manner as for sales prior to January 1, 2014 and applying an expected present value technique to that result. The expected present value technique, an income approach, converts future amounts into a single current discounted amount. In addition to the key estimates of return rates and replacement costs, the Company used certain Level 3 inputs, which are unobservable and significant to the overall fair value measurement. Such additional assumptions are based on the Company’s credit-adjusted risk-free rate (“discount rate”) and compensation comprised of a profit element and risk premium required of a market participant to assume the obligation.
The following table provides information regarding changes in nonfinancial liabilities related to the Company’s warranty obligations measured at fair value on a recurring basis using significant unobservable inputs designated as Level 3 for the periods indicated:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(In thousands)
Balance at beginning of period$150,193 $150,540 $161,793 $106,489 
Accruals for warranties issued during period7,752 12,485 20,251 44,854 
Changes in estimates2,161 (2,561)(12,307)(14,241)
Settlements(4,707)(5,514)(17,043)(19,527)
Increase due to accretion expense2,649 3,157 8,244 10,609 
Change in discount rate — 2,811 759 34,608 
Other(1,328)(2,028)(4,977)(3,902)
Balance at end of period$156,720 $158,890 $156,720 $158,890 
Enphase Energy, Inc. | 2024 Form 10-Q | 17
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Quantitative and Qualitative Information about Level 3 Fair Value Measurements
As of September 30, 2024 and December 31, 2023, the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 were as follows, of which the monetary impact for change in discount rate is captured in “Change in discount rate” in the table above:
Percent Used
(Weighted Average)
Item Measured at Fair ValueValuation TechniqueDescription of Significant Unobservable InputSeptember 30,
2024		December 31,
2023
Warranty obligations for products sold since January 1, 2014Discounted cash flowsProfit element and risk premium17%17%
Credit-adjusted risk-free rate7%7%
Sensitivity of Level 3 Inputs - Warranty Obligations
Each of the significant unobservable inputs is independent of the other. The profit element and risk premium are estimated based on the requirements of a third-party participant willing to assume the Company’s warranty obligations. The discount rate is determined by reference to the Company’s own credit standing at the fair value measurement date, which improved in the three and nine months ended September 30, 2023, contributing to the $2.8 million and $34.6 million change in warranty expense, respectively, captured in “Change in discount rate” in the table above. Under the expected present value technique, increasing the profit element and risk premium input by 100 basis points would result in a $1.1 million increase to the liability. Decreasing the profit element and risk premium by 100 basis points would result in a $1.1 million reduction of the liability. Increasing the discount rate by 100 basis points would result in a $10.8 million decrease to the liability. Decreasing the discount rate by 100 basis points would result in a $12.2 million increase to the liability.
8.    RESTRUCTURING AND ASSET IMPAIRMENT CHARGES    
2023 Restructuring Plan
In the fourth quarter of 2023, the Company implemented a restructuring plan (the “2023 Restructuring Plan”) designed to increase operational efficiencies and execution, reduce operating costs, and better align the Company’s workforce and cost structure with current market conditions, and the Company’s business needs, strategic priorities and ongoing commitment to profitable growth. The Company plans to complete its restructuring activities under the 2023 Restructuring Plan in the fourth quarter of 2024.

The following table presents the details of the Company’s restructuring and asset impairment charges and accrued balances under the 2023 Restructuring Plan for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(In thousands)
Employee Severance and Benefits$105 $— $1,214 $870 
Contract Termination Charges (8)— 1,576 — 
Asset Impairment580 — 965 — 
Total restructuring charges$677 $— $3,755 $870 
Enphase Energy, Inc. | 2024 Form 10-Q | 18