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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, 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 July 19, 2024, there were 135,422,159 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 JUNE 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
June 30,
2024		December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents$252,102 $288,748 
Marketable securities1,394,302 1,406,286 
Accounts receivable, net of allowances of $3,307 and $2,502 at June 30, 2024 and December 31, 2023, respectively
277,475 445,959 
Inventory176,068 213,595 
Prepaid expenses and other assets141,702 88,930 
Total current assets2,241,649 2,443,518 
Property and equipment, net152,070 168,244 
Operating lease, right of use asset, net19,394 19,887 
Intangible assets, net56,715 68,536 
Goodwill213,239 214,562 
Other assets204,202 215,895 
Deferred tax assets, net279,307 252,370 
Total assets$3,166,576 $3,383,012 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$79,646 $116,164 
Accrued liabilities197,556 261,919 
Deferred revenues, current123,577 118,300 
Warranty obligations, current30,261 36,066 
Debt, current98,592 — 
Total current liabilities529,632 532,449 
Long-term liabilities:
Deferred revenues, non-current353,199 369,172 
Warranty obligations, non-current146,918 153,021 
Other liabilities52,872 51,008 
Debt, non-current1,199,432 1,293,738 
Total liabilities2,282,053 2,399,388 
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.00001 par value, 300,000 shares authorized; and 135,396 shares and 135,722 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively
1 1 
Additional paid-in capital993,368 939,338 
Accumulated earnings (deficit)(100,895)46,273 
Accumulated other comprehensive loss(7,951)(1,988)
Total stockholders’ equity884,523 983,624 
Total liabilities and stockholders’ equity$3,166,576 $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
June 30,		Six Months Ended
June 30,
2024202320242023
Net revenues$303,458 $711,118 $566,797 $1,437,134 
Cost of revenues166,292 387,776 314,123 787,421 
Gross profit137,166 323,342 252,674 649,713 
Operating expenses:
Research and development48,871 60,043 103,082 117,172 
Sales and marketing51,775 58,405 105,082 123,026 
General and administrative33,550 34,397 68,732 70,662 
Restructuring and asset impairment charges1,171 177 3,078 870 
Total operating expenses135,367 153,022 279,974 311,730 
Income (loss) from operations1,799 170,320 (27,300)337,983 
Other income, net
Interest income19,203 16,526 38,912 29,566 
Interest expense(2,220)(2,219)(4,416)(4,375)
Other income (expense), net(7,566)(33)(7,479)393 
Total other income, net9,417 14,274 27,017 25,584 
Income (loss) before income taxes11,216 184,594 (283)363,567 
Income tax provision(383)(27,403)(4,981)(59,503)
Net income (loss) $10,833 $157,191 $(5,264)$304,064 
Net income (loss) per share
Basic$0.08 $1.15 $(0.04)$2.23 
Diluted$0.08 $1.09 $(0.04)$2.11 
Shares used in per share calculation:
Basic135,646 136,607 135,768 136,650 
Diluted136,123 145,098 135,768 145,608 

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2024 Form 10-Q | 4
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands)
(Unaudited)
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Net income (loss) $10,833 $157,191 $(5,264)$304,064 
Other comprehensive income (loss):
Foreign currency translation adjustments(684)431 (3,658)1,508 
Marketable securities
Change in net unrealized gain (loss), net of income tax benefit (provision) of $(165) and $(769) for the three and six months ended June 30, 2024, respectively, and $(193) and $(475) for the three and six months ended June 30, 2023, respectively.
(494)(549)(2,305)2,522 
Comprehensive income (loss)$9,655 $157,073 $(11,227)$308,094 
    

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
June 30,		Six Months Ended
June 30,
2024202320242023
Common stock and paid-in capital
Balance, beginning of period$941,316 $812,619 $939,339 $819,120 
Issuance of common stock from exercise of equity awards6,769 556 7,955 596 
Issuance of common stock related to 365 Pronto, Inc. post combination expense— 4,000 — 10,307 
Payment of withholding taxes related to net share settlement of equity awards(7,473)(12,790)(67,515)(84,635)
Stock-based compensation expense52,757 53,655 113,590 112,652 
Balance, end of period$993,369 $858,040 $993,369 $858,040 
Treasury stock, at cost
Balance, beginning of period$— $— $— $— 
Purchases of treasury stock, at cost— (68,140)— (68,140)
Balance, end of period$— $(68,140)$— $(68,140)
Accumulated earnings (deficit)
Balance, beginning of period$(11,820)$164,208 $46,273 $17,335 
Repurchase of common stock(99,908)(131,860)(141,904)(131,860)
Net income (loss) 10,833 157,191 (5,264)304,064 
Balance, end of period$(100,895)$189,539 $(100,895)$189,539 
Accumulated other comprehensive loss
Balance, beginning of period$(6,773)$(6,734)$(1,988)$(10,882)
Foreign currency translation adjustments(684)431 (3,658)1,508 
Change in net unrealized gain (loss) on marketable securities, net of tax(494)(549)(2,305)2,522 
Balance, end of period$(7,951)$(6,852)$(7,951)$(6,852)
Total stockholders' equity, ending balance
$884,523 $972,587 $884,523 $972,587 

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)
Six Months Ended
June 30,
20242023
Cash flows from operating activities:
Net income (loss)$(5,264)$304,064 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization40,621 34,419 
Net amortization (accretion) of premium (discount) on marketable securities1,795 (17,705)
Provision for doubtful accounts1,767 629 
Asset impairment6,573 — 
Non-cash interest expense4,289 4,140 
Net loss (gain) from change in fair value of debt securities989 (3,498)
Stock-based compensation113,590 113,821 
Deferred income taxes(22,368)(26,796)
Changes in operating assets and liabilities:
Accounts receivable159,542 (83,497)
Inventory37,527 (16,403)
Prepaid expenses and other assets(53,707)(41,993)
Accounts payable, accrued and other liabilities(90,228)107,225 
Warranty obligations(11,908)49,269 
Deferred revenues(6,955)91,800 
Net cash provided by operating activities176,263 515,475 
Cash flows from investing activities:
Purchases of property and equipment(17,007)(66,478)
Purchases of marketable securities(772,321)(1,272,908)
Maturities and sale of marketable securities779,436 911,804 
Net cash used in investing activities(9,892)(427,582)
Cash flows from financing activities:
Partial settlement of convertible notes(2)— 
Proceeds from issuance of common stock under employee equity plans7,955 596 
Payment of withholding taxes related to net share settlement of equity awards(67,515)(84,635)
Repurchase of common stock(141,904)(200,000)
Net cash used in financing activities(201,466)(284,039)
Effect of exchange rate changes on cash and cash equivalents(1,551)1,578 
Net decrease in cash and cash equivalents(36,646)(194,568)
Cash and cash equivalents—Beginning of period288,748 473,244 
Cash and cash equivalents—End of period$252,102 $278,676 
Supplemental cash flow disclosure:
Supplemental disclosures of non-cash investing activities:
Purchases of property and equipment included in accounts payable$5,008 $8,310 

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 (loss), stockholders’ equity and cash flows for the interim periods indicated. The results of operations for the three and six months ended June 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
June 30,		Six Months Ended
June 30,
2024202320242023
(In thousands)
Primary geographical markets:
United States$198,712 $417,582 $348,686 $890,543 
International104,746 293,536 218,111 546,591 
Total$303,458 $711,118 $566,797 $1,437,134 
Timing of revenue recognition:
Products delivered at a point in time$272,592 $684,122 $505,737 $1,385,774 
Products and services delivered over time30,866 26,996 61,060 51,360 
Total$303,458 $711,118 $566,797 $1,437,134 
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:
June 30,
2024		December 31,
2023
(In thousands)
Accounts receivables$277,475 $445,959 
Short-term contract assets (Prepaid expenses and other assets)41,736 40,241 
Long-term contract assets (Other assets)119,644 124,190 
Short-term contract liabilities (Deferred revenues, current)123,577 118,300 
Long-term contract liabilities (Deferred revenues, non-current)353,199 369,172 
The Company receives payments from customers based upon contractual billing schedules. Accounts receivable 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 $3.3 million and $2.5 million as of June 30, 2024 and December 31, 2023, respectively. 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 six months ended June 30, 2024.
Significant changes in the balances of contract assets (prepaid expenses and other assets) as of June 30, 2024 are as follows (in thousands):
Contract Assets
Contract Assets, beginning of period$164,431 
Amount recognized(21,225)
Increased due to billings18,174 
Contract Assets, end of period$161,380 
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 June 30, 2024 are as follows (in thousands):
Contract Liabilities
Contract Liabilities, beginning of period$487,472 
Revenue recognized(61,060)
Increased due to billings50,364 
Contract Liabilities, end of period$476,776 
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:
June 30,
2024
(In thousands)
Fiscal year:
2024 (remaining six months)$62,818 
2025117,914 
2026100,983 
202781,367 
202860,125 
Thereafter53,569 
Total$476,776 
3.    OTHER FINANCIAL INFORMATION
Inventory
Inventory consists of the following:
June 30,
2024		December 31,
2023
(In thousands)
Raw materials$49,469 $30,849 
Finished goods126,599 182,746 
Total inventory$176,068 $213,595 
Accrued Liabilities
Accrued liabilities consist of the following:
June 30,
2024		December 31,
2023
(In thousands)
Customer rebates and sales incentives$90,962 $158,338 
Liability due to supply agreements36,691 32,973 
Freight11,735 19,262 
Salaries, commissions, incentive compensation and benefits12,328 10,316 
Income tax payable2,726 8,531 
Operating lease liabilities, current5,123 5,220 
VAT payable7,282 3,243 
Liabilities related to restructuring accruals1,322 3,104 
Other29,387 20,932 
Total accrued liabilities$197,556 $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 June 30, 2024 and December 31, 2023 was as follows:
GoodwillJune 30,
2024		December 31,
2023
(In thousands)
Goodwill, beginning of period$214,562 $213,559 
Currency translation adjustment(1,323)1,003 
Goodwill, end of period$213,239 $214,562 
The Company’s purchased intangible assets as of June 30, 2024 and December 31, 2023 were as follows:
June 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 (32,017)19,037 51,044 (27,093)— 23,951 
 Customer relationships51,306 (32,671)18,635 55,106 (29,527)(3,807)21,772 
 Trade names37,700 (18,943)18,757 37,700 (15,173)— 22,527 
Total purchased intangible assets$140,346 $(83,631)$56,715 $144,136 $(71,793)$(3,807)$68,536 
During the six months ended June 30, 2024, intangible assets decreased 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
June 30,		Six Months Ended
June 30,
2024202320242023
(In thousands)
Developed technology$2,458 $2,455 $4,925 $4,910 
Customer relationships
1,567 2,454 3,143 4,908 
Trade names1,885 1,885 3,770 3,770 
Total amortization expense
$5,910 $6,794 $11,838 $13,588 
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.
Enphase Energy, Inc. | 2024 Form 10-Q | 12
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 June 30, 2024, the balance of customer intangible relationship assets is $18.6 million, which includes $8.1 million related to one customer. This customer is experiencing considerable financial difficulties as of July 23, 2024. The management has evaluated that the carrying amount of that asset as of June 30, 2024 is recoverable and will continue to evaluate the impacts on its financial statements as more information is publicly available.
The expected future amortization expense of intangible assets as of June 30, 2024 is presented below:
June 30,
2024
(In thousands)
Fiscal year:
2024 (remaining six months)$10,887 
202521,370 
202619,080 
20275,092 
Total$56,429 
5.    CASH EQUIVALENTS AND MARKETABLE SECURITIES
The cash equivalents and marketable securities consist of the following:
As of June 30, 2024
Amortized CostGross Unrealized GainsGross Unrealized LossesFair ValueCash EquivalentsMarketable Securities
(In thousands)
Money market funds$79,051 $— $— $79,051 $79,051 $— 
Certificates of deposit41,213 27 — 41,240 — 41,240 
Commercial paper70,853 2 (68)70,787 — 70,787 
Corporate notes and bonds392,445 228 (790)391,883 3,551 388,332 
U.S. Treasuries247,809 — (208)247,601 24,963 222,638 
U.S. Government agency securities673,929 29 (2,653)671,305 — 671,305 
Total$1,505,300 $286 $(3,719)$1,501,867 $107,565 $1,394,302 
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 
Enphase Energy, Inc. | 2024 Form 10-Q | 13
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table summarizes the contractual maturities of the Company’s cash equivalents and marketable securities as of June 30, 2024:
Amortized CostFair Value
(In thousands)
Due within one year$1,128,945 $1,126,814 
Due within one to three years376,355 375,053 
Total$1,505,300 $1,501,867 
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
June 30,		Six Months Ended
June 30,
2024202320242023
(In thousands)
Warranty obligations, beginning of period$177,164 $146,034 $189,087 $131,446 
Accruals for warranties issued during period6,424 16,344 12,522 32,515 
Benefit from changes in estimates(275)(10,363)(12,636)(6,635)
Settlements(7,606)(5,092)(14,499)(13,986)
Increase due to accretion expense2,690 3,907 5,595 7,452 
Change in discount rate(1)
759 31,797 759 31,797 
Other(1,977)(1,912)(3,649)(1,874)
Warranty obligations, end of period177,179 180,715 177,179 180,715 
Less: warranty obligations, current(30,261)(36,686)(30,261)(36,686)
Warranty obligations, non-current$146,918 $144,029 $146,918 $144,029 
(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 June 30, 2024, the Company recorded $0.3 million in warranty benefit from change in estimates, of which $1.8 million and $1.4 million related to a decrease in product replacement costs and continuing analysis of field performance data and diagnostic root-cause failure analysis, respectively, for Enphase IQ® Battery storage systems, partially offset by an increase of $2.9 million for continuing analysis of field performance data and diagnostic root-cause failure analysis for all other products. In the three months ended June 30, 2023, the Company recorded $10.4 million in warranty benefit from change in estimates, of which $14.4 million related to a decrease in product replacement costs related to Enphase IQ Battery systems and $2.1 million related to a decrease in product replacement costs for all other products, partially offset by $6.1 million for increasing the warranty period for the Enphase IQ Battery from 10 years to 15 years.
In the six months ended June 30, 2024, the Company recorded $12.6 million in warranty benefit from change in estimates, of which $11.1 million and $4.4 million related to a decrease in product replacement costs and continuing analysis of field performance data and diagnostic root-cause failure analysis, respectively, for Enphase IQ® Battery storage systems, partially offset by an increase of $2.9 million for continuing analysis of field performance data and diagnostic root-cause failure analysis for all other products. In the six months ended June 30, 2023, the Company recorded $6.6 million in warranty benefit from change in estimates, of which $20.5 million related to a decrease in product replacement costs related to Enphase IQ Battery systems and $2.1 million related to decrease in product replacement costs for all other products, partially offset by $6.1 million for increasing the warranty period for the Enphase IQ Battery from 10 years to 15 years, and by $9.9 million related to continuing analysis of field performance data and diagnostic root-cause failure analysis primarily for Enphase IQ Battery storage systems and 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.
•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.
Enphase Energy, Inc. | 2024 Form 10-Q | 15
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table presents assets and liabilities measured at fair value on a recurring basis using the above input categories:
June 30, 2024December 31, 2023
(In thousands)
Level 1Level 2Level 3Level 1Level 2Level 3
Assets:
Cash and cash equivalents:
Money market funds$79,051 $— $— $132,037 $— $— 
Certificates of deposit— — — 750 — 
Commercial paper— — — — 1,694 — 
Corporate notes and bonds3,551 — — 462 — 
U.S. Treasuries24,963 — — — — 
Marketable securities:
Certificates of deposit— 41,240 — — 55,162 — 
Commercial paper— 70,787 — — 69,743 — 
Corporate notes and bonds— 388,332 — — 405,634 — 
U.S. Treasuries— 222,638 — — 327,891 — 
U.S. Government agency securities— 671,305 — — 547,856 — 
Other assets
Investments in debt securities— — 78,866 — — 79,855 
Total assets measured at fair value$79,051 $1,422,816 $78,866 $132,037 $1,409,192 $79,855 
Liabilities:
Warranty obligations
Current$— $— $21,858 $— $— $28,667 
Non-current— — 128,335 — — 133,126 
Total warranty obligations measured at fair value— — 150,193 — — 161,793 
Total liabilities measured at fair value$— $— $150,193 $— $— $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 June 30, 2024, the fair value of the Notes due 2028, Notes due 2026 and Notes due 2025 was $471.5 million, $575.1 million and $166.3 million, respectively. The fair value as of June 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.
Enphase Energy, Inc. | 2024 Form 10-Q | 16
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Investments in debt securities
Investment in debt securities is recorded in “Other assets” on the accompanying condensed consolidated balance sheets as of June 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
June 30,		Six Months Ended
June 30,
2024202320242023
(In thousands)
Balance at beginning of period$80,797 $58,521 $79,855 $56,777 
Fair value adjustments included in other income, net(1,931)1,754 (989)3,498 
Balance at end of period$78,866 $60,275 $78,866 $60,275 
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 three and six months ended June 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 three and six months ended June 30, 2024.
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
June 30,		Six Months Ended
June 30,
2024202320242023
(In thousands)
Balance at beginning of period$150,550 $119,508 $161,793 $106,489 
Accruals for warranties issued during period6,417 16,344 12,499 32,369 
Changes in estimates(2,450)(12,925)(14,468)(11,680)
Settlements(5,796)(6,179)(12,336)(14,013)
Increase due to accretion expense2,690 3,907 5,595 7,452 
Change in discount rate 759 31,797 759 31,797 
Other(1,977)(1,911)(3,649)(1,874)
Balance at end of period$150,193 $150,540 $150,193 $150,540 
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 June 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 InputJune 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 six months ended June 30, 2023, contributing to the $31.8 million change in warranty expense 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 $10.6 million reduction of the liability. Decreasing the discount rate by 100 basis points would result in a $12.0 million increase to the liability.
8.    RESTRUCTURING AND ASSET IMPAIRMENT CHARGES    
2023 Restructuring Plan
In the fourth quarter of 2023, the Company implemented a new 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 second half 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 six months ended June 30, 2024 and 2023:

Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
(In thousands)
Employee Severance and Benefits$839 $177 $1,109 $870 
Contract Termination Charges 279 — 1,584 — 
Asset Impairment53 — 385 — 
Total restructuring charges$1,171 $177 $3,078 $870 
Enphase Energy, Inc. | 2024 Form 10-Q | 18
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table provides information regarding changes in the Company’s accrued restructuring balances for the periods indicated:
Employee Severance and BenefitsContract Termination Charges Asset ImpairmentTotal
(In thousands)
Balance as of December 31, 2023$1,304 $1,800 $— $