Weak European demand and Enphase Energy's (ENPH.US) Q3 results and guidance miss expectations

Global micro-inverter leader Enphase Energy (ENPH.US) reported disappointing earnings and guidance, sending its stock down over 11% after hours.

The company's third-quarter net profit fell to US$45.76 million (US$0.33 per share) from US$113.95 million (US$0.80 per share) a year earlier; its GAAP gross margin fell to 46.8% from 47.5%, and its non-GAAP gross margin fell to 48.1% from 48.4%, including a 9.2% net gain on IRA.

Enphase's revenue in the third quarter fell 15% sequentially, as demand on the European continent further weakened, and residential solar demand in Europe deteriorated amid falling electricity prices and increased competition in major markets such as the Netherlands and Germany. However, its revenue in the US, its largest market, grew 43% sequentially; its global micro-inverter shipments fell 55% year-on-year to 1.73 million units.

Looking ahead, Enphase expects its fourth-quarter revenue to be US$360 million to US$400 million, below analysts' expectations of US$433.5 million, and its non-GAAP gross margin to be between 49% and 52%, including a net gain on IRA, and its gross margin without net IRA interest to be between 39% and 42%.

The company also expects to start shipping domestically sourced, higher content commercial micro-inverters and batteries from its US manufacturing facility in the fourth quarter.

Enphase's disappointing results also dragged down the solar sector broadly, with SolarEdge Technologies (SEDG.US) falling nearly 4% and Sunrun (RUN.US) and First Solar (FSLR.US) falling nearly 2% and over 1% respectively after hours on Tuesday.