Enphase Energy, the California-based supplier of microinverters, has suffered its biggest slump since the company went public in 2012 having endured a tough third quarter that saw sales growth slow significantly in the face of sustained competition from its main rival in the U.S., SolarEdge.
Shares in the company fell 37% to $2.33 in New York on Wednesday as Q3 financial results showed that the company sold just 219 MW of inverters over the period, up 28% year-over-year and a 12% increase on Q2, but revealed the fact that revenue at just $102.9 million equated to an average selling price of just $0.47/W, down from $0.58/W at the same stage in 2014.
This 19% price reduction was triggered by sustained competition from SolarEdge, the Israeli power optimizer company that is set to become the market leader in the U.S. residential market this year. Enphase, meanwhile, has lowered its Q4 sales forecast by around 40% to just $62 – $70 million based on lower prices and high inventory levels in its distribution network.
On an earnings call discussing the results, Enphase CEO Paul Nahi said: "The fourth quarter of 2015 is more challenging than expected. To accelerate the expansion of our business we have adopted a more aggressive pricing strategy."
Deutsche Bank analyst Vishal Shah duly lowered its outlook for the company based on Enphases financials and forecast, stating: "Cautious Q4 outlook and comments indicating increased pricing pressure in 2016 support our cautious view on shares. Enphase is working on an aggressive cost roadmap to bring product costs down to optimizer cost levels by end of 2016 and string inverter cost levels by end of 2017."
Shah added, however, that margins could remain under pressure until then, with challenging market conditions delivering a strong headwind for shares. An absence of positive cash flow over the current quarter may also prompt Enphase to draw down some $17 million on an existing bank credit facility, the companys CEO revealed.
Enphases Q3 performance is in stark contrast to that of SolarEdge, which this week reported record revenues of $115 million for the quarter, a healthy balance sheet and shipments of 356 MW in the U.S. alone.