Thank you for standing by, and welcome to the Enphase Energy Fourth Quarter 2021 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. If you'd like to ask a question at that time, please press star then one on your touchtone telephone. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Karen Sagot. Please go ahead. Good afternoon, and thank you for joining us on today's conference call to discuss Enphase Energy's fourth quarter 2021 results. On today's call are Badri Kothandaraman, Enphase's President and Chief Executive Officer, Eric Branderiz, Chief Financial Officer, Mandy Yang, Chief Accounting Officer and Corporate Treasurer, and Raghu Belur, Chief Products Officer. After the market closed today, Enphase issued a press release announcing the results for its fourth quarter ended December 31st, 2021. During this conference call, Enphase management will make forward-looking statements, including, but not limited to, statements related to Enphase Energy's expected future financial performance, the capability of our technology and products, including features, performance in our operations, including manufacturing and customer service, the anticipated growth in our sales and in the markets in which we operate and target, the benefits to homeowners and installers, and regulatory issues. These forward-looking statements involve significant risks and uncertainties, and Enphase Energy's actual results and the timing of events could differ materially from these expectations. For a more complete discussion of the risks and uncertainties, please see the company's annual report on Form 10-K for the year ended December 31st, 2020, which is on file with the SEC, and annual report on Form 10-K for the year ended December 31st, 2021, which will be filed with the SEC in the first quarter of 2022. Enphase Energy cautions you not to place any undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in expectations. Also, please note that financial measures used on this call are expressed on a non-GAAP basis unless otherwise noted and have been adjusted to exclude certain charges. The company has provided a reconciliation of these non-GAAP financial measures to GAAP financial measures in its earnings release posted today, which can also be found in the investor relations section of its website. Now I'd like to introduce Badri Kothandaraman, President and Chief Executive Officer of Enphase Energy. Badri. Good afternoon, and thanks for joining us today to discuss our fourth quarter 2021 financial results. We had a good quarter. We reported revenue of $412.7 million, shipped approximately 3 million microinverters and 100.2 MWh of IQ Batteries, achieved non-GAAP gross margin of 40.2%, and generated free cash flow of $84.1 million. We started production shipments of our IQ8 microinverters for customers in North America during Q4, and we have been very pleased with customer feedback so far. We exited the fourth quarter at approximately 40/17/24. This means 40% gross margin, 17% operating expenses, and 24% operating income, all as a percentage of revenue on a non-GAAP basis. As a reminder, our baseline financial model is 35/15/20. We will go into detail about our financials later in the call. Let's now discuss how we are servicing customers. Our Q4 NPS worldwide was 69% compared to 67% in Q3. Our North American NPS was 73% compared to 71% in Q3. Our average call wait time increased to 8.9 minutes in Q4 compared to 5.5 minutes in Q3 as we onboarded new installers and fielded more calls on our batteries. The ramp of our batteries has significantly increased call volumes as new installers learn how to commission the system and homeowners learn about the system's features. We are not happy about the higher wait time, and we are working on it to reduce it under a minute through staffing and training. During Q4, we also increased the number of field service technicians in the U.S. and Europe to provide on-site help to our installers, particularly on batteries. Let's talk about manufacturing. Our operations team did a great job flexing manufacturing as 2021 played out. As we have discussed in the past earnings call, the global supply chain situation, the global supply chain is still under a little bit of stress, but our situation has been stable, primarily due to diligent supplier management and qualification of alternate suppliers during the past year. Our supply of AC FET drivers is at a very healthy level, and we have five sources for AC FET drivers. For ASICs used in our microinverters, our supply was quite healthy in Q4, and we continue to manage it closely as we ramp IQ8, and we have two foundry sources for our ASICs. With the growing demand for our microinverters, we remain vigilant regarding the global supply chain and logistics. Given our strong demand, we added a fully automated line in Q4, bringing quarterly capacity to 2.25 million microinverters in Mexico. We had already added a second fully automated line earlier in 2021 at our contract manufacturer, Salcomp, in India, bringing that quarterly capacity to about 1.5 million microinverters. Along with our existing capacity in China, we can now do a little more than 5 million microinverters per quarter in total for all microinverters worldwide. We are also planning to add a contract manufacturing facility for microinverters in Europe by the end of this year. We see rapid growth in the region and would like to service customers better. Let's now talk about batteries. Our two sources for battery cell packs have increased their capacity to 180 MWh per quarter from 120. Our existing cell pack suppliers are capable of adding even more capacity if needed, and we are continuing discussions with additional cell pack suppliers as well. As always, there are a few components that we are managing to ensure we don't have a supply disruption. There is never a dull day for our operations team in these times. Our lead times for batteries are still long today at approximately 14-16 weeks, primarily due to logistics challenges, which are global. The lead times should come down once global shipping and port conditions improve. Let's move on to the regions. Our U.S. and international revenue mix for Q4 was 82% and 18% respectively. For 2021, we achieved record revenue across all regions with more than 78% growth year-on-year. Our U.S. and international revenue mix for the full year was 80% and 20% respectively. In the U.S., revenue increased 74% year-over-year. We reported record revenue and sell-through from our distribution partners to installers for both microinverters and batteries in Q4. Our microinverter channel inventory was at a healthy level at the end of Q4, but our storage channel inventory remained tight due to strong demand and logistics challenges. We expect microinverter channel inventory to remain healthy in Q1 and storage channel inventory to improve. In Europe, revenue more than doubled year-over-year. I am very pleased with our team's performance and excited about the growth in 2022. During 2021, we expanded into Italy with solar microinverters and introduced batteries in Germany and Belgium. We do plan to introduce batteries in other countries in Europe steadily throughout 2022. In Asia Pacific region, revenue increased 80% year-over-year. Heading into 2022, we look to capitalize on the industry's recovery from COVID restrictions, as well as recent regulatory changes that are favorable to our software-defined AC architecture. We plan to introduce batteries in Australia in the H2 of 2022. In Latin America, revenue increased 77% year-over-year. We remain quite bullish about our solar plus storage business in Puerto Rico and expect steady growth there in the next few quarters. We're also very pleased with the progress we are making in Brazil as we started ramping IQ 7+ microinverters to installers in Q4. Now that we covered all the regions, let's discuss the overall bookings for Q1. Our overall customer demand for Q1 is quite robust for both microinverters and batteries and exceeds the higher end of our guidance range. The component availability is certainly better than what we experienced last year. We are primarily left with logistics challenges which are global in general and not very specific to Enphase. We are quite optimistic that our supply will catch up to demand during the year. Let's talk about our storage systems. We shipped 100.2 MWh of IQ Batteries, which was a significant 53% increase from Q3. As I mentioned, our lead times are a little long at around 14-16 weeks, mainly due to logistics challenges. We expect to ship between 110 MWh and 120 MWh of batteries in Q1. This represents a 15% growth from Q4. Due to the increase in logistics costs, which are significant, and an increase in component costs driven by inflation, we are implementing a modest price increase on our batteries beginning March 2022. Let's talk about installer training on battery. By the end of Q4, we trained approximately 4,845 installer personnel, representing approximately 2,000+ installation companies. Our hands-on storage training continued through the use of mobile vans and regional training centers in the fourth quarter. We are continuing to work on commissioning times for installers while adding features such as load control and generator compatibility to our batteries. We expect to introduce batteries in North America and Australia with a modularity of 5 kWh and double the continuous and peak power in the H2 of 2022. We believe this will not only enhance the customer experience significantly, it will also bring down the cost. Let's talk about new products. We started production shipments of IQ8 microinverters for customers in North America in Q4, late Q4. The IQ 8 fundamentally changes the paradigm for solar technology, which otherwise requires a grid connection to operate. IQ 8 can form a microgrid during a power outage using only sunlight, providing backup power even without a battery. For homeowners who want a battery, there are no sizing restrictions on pairing an Enphase battery with an IQ 8 solar system. We also expect to introduce IQ 8 micro inverters internationally in the H2 of 2022. Let's now talk about the IQ 8 D full system for small commercial solar application. We have achieved compliance on the 640 W AC micro inverter for North America, and we are now focused on getting the full system and installer platform ready. We expect pilot shipments of the full system to select installers in this quarter, Q1, with volume shipments beginning in Q2. Let's go to ClipperCreek, an acquisition we completed in Q4. ClipperCreek offers EV charging solutions for residential and commercial customers in the U.S. They have been a pioneer in the EV charging market since 2006 and have sold more than 110,000 Level 2 charging stations, AC charging stations since inception. The business is very healthy and the gross margins are in line with Enphase. The ClipperCreek brand has a reputation for quality, high quality and great service, which we like a lot. Let me outline our plans for ClipperCreek. We plan to transfer manufacturing to our contract manufacturing facility in Mexico by the end of this year so that we can rapidly scale the business and support demand. We're also looking forward to introducing the products imminently to distribution and installation partners in the U.S. In addition, we plan to introduce connectivity in every charger we'll be shipping to enable smart EV charging with the Enphase app. This will enable charging on a schedule, tariff optimization, and charging with green electrons from an Enphase solar plus storage home energy system. For the long term, we plan to work on bidirectional charging and grid services integration for vehicle-to-home and vehicle-to-grid applications. Let me go to grid services. In December, we announced our participation in Arizona Public Service, APS, residential battery grid services program. The program offers homeowners who install Enphase batteries in APS' territory, the chance to participate and earn money through one-time upfront incentives. We believe this new program from APS will help accelerate the adoption of Enphase systems in Arizona. We have previously discussed our participation in the ConnectedSolutions program and Hawaiian Electric battery bonus grid services programs. As a reminder, ConnectedSolutions is an incentive program implemented by three utilities in Connecticut, Massachusetts and Rhode Island to reduce electrical demand during high use periods. The Hawaiian Electric battery bonus grid services program offers incentive for homeowners on the island of Oahu who install a new home battery. We also have about a dozen new grid services engagements in the pipeline, and we look forward to working with more utilities and aggregators in the months ahead. Let's talk about the installer digital platform. We are working to release Solargraf Pro later this quarter to improve the installer experience with an all-in-one solar and storage design and proposal tool that incorporates shading analysis, the ability to detect obstructions on the roof, and 3D modeling of homes, all driven by AI. The product is currently being piloted by key installers. Yeah, some of our top installers, and will be released later this quarter. The former solar business of DIN Engineering, now Enphase Noida, provides proposal and permitting services. There, we have added significant resources to accelerate automation, and we expect to offer enhanced permitting services in the H2 of the year. As part of our efforts to further strengthen the installer digital platform, we acquired 365 Pronto in Q4. The company offers a predictive software platform dedicated to simplifying maintenance by matching cleantech asset owners to a local and on-demand workforce of service providers. The software platform will provide our installers the ability to service their own O&M contract. Let me now give you an update on our Enphase Installer Network or EIN. We have now onboarded approximately 1,130 installers to our EIN worldwide through a highly selective process focused on installation quality and an exceptional homeowner experience. Next, I would like to comment on the California NEM 3.0 proposed decision or PD, which was announced originally in December. In our opinion, the PD in its current form unfairly penalizes solar-only systems by imposing fixed charges, significantly reducing export compensation and retroactively changing the length of the original NEM contract. The PD was meant to encourage the transition from solar only to solar plus storage. While we believe this transition is a correct long-term goal to meet California's energy targets, storage is not yet fully mature for 100% attached in terms of cost, in terms of supply, in terms of permitting, warranty and training. We would like to see a modified PD where the fixed charges are removed, the original length of the existing NEM contracts are restored, and a multi-year glide path is established to gradually reduce the export compensation. We are working diligently with various stakeholders to try and influence a better outcome in order to eliminate any market disruptions and create a win-win for all rate payers and utilities. In summary, we are pleased with our overall performance. As a reminder, our strategy is to build best-in-class home energy systems and deliver them to homeowners through our installation and distribution partners, enabled by an installer digital platform. With our recent acquisitions, we are now able to offer more complete home energy systems to our partners, comprising of solar, batteries, grid services, load control, EV chargers, and even compatibility with most third-party generators. We can also now offer design and proposal software, permitting services, installation and commissioning software, fleet management and monitoring software, and finally, O&M services for our installers through the digital platform. I would like to thank our employees for their hard work towards our strategy and continued dedication to advancing a sustainable future for all. Before I turn the call over to discuss our financials, I want to inform you that Eric Branderiz is retiring from Enphase. His last day at Enphase will be February 14th. He has been a great partner to me over the last three and a half years, and his financial leadership helped drive our sustained profitability and shareholder value. We would like to thank him for his service and wish him well as he takes time to spend with his family. I'm pleased to announce that Mandy Yang, our Chief Accounting Officer and Corporate Treasurer, has accepted the role of CFO effective February 15th. With Mandy as our CFO, we will have a seamless transition as we continue to deliver growth and operational excellence. Eric will be in an advisory capacity with Enphase through June 30th to assist with this transition. With that, I will hand the call over to Eric for his review of our financial results. Eric? Thanks Badri and good afternoon everyone. I would like to convey my deep gratitude for my experience at Enphase. I have had the pleasure to work with not only a very talented executive team, but also a remarkable group of professionals who have shown such a hard work and dedication to the company. I want to especially thank Badri for his partnership and leadership in driving Enphase success. I plan to remain a shareholder, and I wish the company continued success. I will provide more details related to our fourth quarter of 2021 financial results and hand over the call to Mandy to provide our business outlook for the first quarter of 2022. We have provided reconciliation of these non-GAAP to GAAP financial measures in our earnings release posted today, which can also be found in the IR section of our website. Total revenue for Q4 was $412.7 million, representing an increase of 17% sequentially and a quarterly record. We shipped approximately 1,082 MW DC of microinverters and 100.2 MWh of IQ Batteries in the quarter. Non-GAAP gross margin for Q4 was 40.2% compared to 40.8% in Q3. Non-GAAP gross margin was impacted by product mix. GAAP gross margin was 39.6% for Q4. Non-GAAP operating expenses were $68.2 million for Q4 compared to $57.3 million for Q3. The sequential increase was primarily due to increased investment in product launches, R&D, and IT infrastructure. GAAP operating expenses were $105.6 million for Q4 compared to $103 million for Q3. GAAP operating expenses for Q4 included $35 million of stock-based compensation expenses and $2.7 million of acquisition-related expenses and amortization for acquiring tangible assets. On a non-GAAP basis, income from operations for Q4 was $97.7 million compared to $85.9 million for Q3. On a GAAP basis, income from operations was $57.7 million for Q4 compared to $37.4 million for Q3. On a non-GAAP basis, net income for Q4 was $102.8 million compared to $84.2 million for Q3. This resulted in non-GAAP diluted earnings per share of $0.73 for Q4 compared to $0.60 per share for Q3. GAAP net income for Q4 was $52.6 million compared to GAAP net income of $21.8 million for Q3. GAAP diluted earnings per share was $0.37 for Q4 compared to diluted earnings per share of $0.15 for Q3. We exited Q4 with a total cash equivalents, and marketable securities balance of approximately $1 billion compared to approximately $1.4 billion at the end of Q3. We repurchased our common stock for a total amount of $300 million in on the open market in December 2021. Against our previously announced $500 million share repurchase authorization, together with the $200 million of share buyback in May 2021, we repurchased approximately $3.2 million shares in 2021 for a total of $500 million with an average price of $155 per share. This represents approximately 2.4% of our outstanding shares. In Q4, we generated $97.2 million in cash flow from operations and $84.1 million in free cash flow. For the year 2021, we generated a record $315.5 million of free cash flow. Capital expenditure was $13.2 million for Q4 to expand both microinverter and storage manufacturing capacity, as well as costs related to new product development. I will now hand over the call to Mandy to discuss our Q1 outlook. There is no greater joy for me to see her accepting this role as the CFO of Enphase. I cannot think of anyone more capable or with higher integrity to take on the challenges of this function as the company continues to grow both organically and in complexity. Mandy is a remarkable professional with the right combination of finance and accounting technical skills, coupled with a proven track record of building large global finance teams. Under her leadership, she will take this function to an even higher level of excellence. Mandy has been Chief Accounting Officer and Corporate Treasurer of Enphase for the past three and a half years and has done an outstanding job leading the controllership, finance operations, internal audit and control, treasury, and banks functions of Enphase. With this transition to her as the new CFO, we will not miss a bit, and I am very pleased she has accepted this new role. Mandy? Thanks, Eric. It's been great for me to work with Eric at Enphase. Under his leadership, we have built an exceptional finance team, and I look forward to building on that foundation. We expect our revenue for the first quarter of 2022 to be within a range of $420 million-$440 million, which includes shipments of 110-120 MWh of IQ Batteries. We expect GAAP gross margin to be within a range of 37%-40% and non-GAAP gross margin to be within a range of 38%-41%, which includes stock-based compensation expenses and acquisition-related amortization. We expect our GAAP operating expenses to be within a range of $130.5 million-$133.5 million, including a total of approximately $63 million estimated for stock-based compensation expenses and acquisition related expenses and amortization. The estimated stock-based compensation expenses include approximately $12.3 million, accruals for the earn outs that are tied to certain performance targets to be paid in the company's stock for the acquisitions of ClipperCreek and 365 Pronto. We expect our non-GAAP operating expenses to be within a range of $67.5 million-$70.5 million. With that, I will now open the line for questions. Certainly. Ladies and gentlemen, if you have a question at this time, please press star then one. We'd like to ask you that you please limit yourself to one question and one follow-up. You may get back in the queue as time allows. Our first question comes from the line of Philip Shen from Roth Capital Partners. Your question please. Hi, everyone. Congrats on the strong quarter. Our checks suggest demand for the battery product is very strong, even in the face of the two recent price hikes. When do you expect your battery volumes to possibly hit 180 MWh? When could a third supplier or the capacity within the existing two supplers be increased? Thanks. Yeah, thank you Philip. We are very happy with our demand on batteries. I'll give you some color on how we have done in the last year. You know, first of all, our battery is AC coupled, it's modular, low voltage DC operation, uses lithium iron phosphate, which is extremely safe chemistry, air cooled, no need of any fans. Additionally, we offer, you know, 15-year warranty, you know, no single point of failure. Through the last year, we have offered load control, we have offered, you know, power start, generator compatibility, and all of those are bells and whistles that we have continuously added on top of our batteries, you know, the basic functionality. In addition, you know, the most important thing I'm proud of, we have trained over 2,000 installers, long-tail installers. It's no secret that long-tail installers is Enphase's bread and butter. We have trained 2,000+ installers, installation companies that is. Then out of that 2,000, there is 1,300+ installers who are certified, which is they have done an installation, you know, they took the training, they did an installation, and we certified them. It's extremely difficult to do one installer at a time in the last year. We believe that's the reason why our business is very strong and diversified. At the same time, in the last year, almost on a weekly basis, we have done weekly roundtables with our installers, where in every meeting we have 10+ installers around, and they're not afraid to talk about issues. I'm not saying we are perfect, but what we promise installers is we take feedback, we work on it, we improve our product, and we make our product better and better and better. That, that's why you saw us growing 53% from Q3 - Q4. Those are nice numbers, by the way. From a supply chain perspective, every quarter we are doing better on batteries. It is no secret that the logistics challenges are global. That's what, you know, is causing a 14-16-week lead time on batteries. When do I expect it to get better? I expect it to get better continuously throughout 2022. It is, it is global. Nothing specific with Enphase. Of course, we have pockets of shortages here and there, but our team has become excellent at navigating all of those very well. I expect continuous growth on batteries throughout the year. I'm not gonna give you a number on when we will break the 180 MWh. You know, if we break the 180 MWh soon, our cell pack, you know, suppliers are willing to flex and they will take us to a little bit more. We are not worried about that too much. Right now, we are focused on servicing customers properly, adding new installers, and making sure we improve customer experience. Great. Thanks for that color, Badri. In terms of my follow-up, I was wondering if you might be able to share where the margins on the storage product is or are today. You know, with the price increases, does that correspond with the 7%, I think, expected for March first increase? Does that correspond directly to that margin? How do you expect that battery margin to trend through 2022? We're not breaking out the battery gross margin. The overall company gross margin was 40.2% in Q4. You know, I'll give you guys some general color on gross margins. In the last year, the overall industry, almost all industries have seen lot of component shortages and logistics, you know, problems, which is from a component cost perspective, the costs have increased significantly. The same thing on logistics. A container before, which was $3,000 is now $18,000, 6x increase. Our costs have gone up. What our team has done is remarkable, which is both on microinverters and batteries. We are able to still take costs out. A couple of examples which I mentioned in the Analyst Day was the bulkhead. The bulkhead on our microinverter. That's the project we've been talking about for some time. It is a painful learning for us, but it's a very important project because it helps us to remove an adapter cable shipped with the microinverters. If we remove that adapter cable, the cost of the microinverter obviously goes down. With initiatives like that, our cost has actually gone down. Because of the component shortages, the suppliers have raised, yeah, you know, costs on us, which is understandable and due to inflation as well. You know, similar on batteries. On batteries, the same dynamics with reference to suppliers. What are we doing about it? You know, every day, we work on the tactical stuff, you know. How can we optimize the enclosure? How can we optimize the battery management circuit? We are going to introduce a product in H2 of 2022, where because we are going to increase the modularity a little bit to from a 3.3 kWh - 5 kWh, we gain economies of scale there. That's gonna help us improve the cost on batteries, you know, come the H2 of 2022 structurally. In addition, on top of that, I showed you in the Analyst Day that early 2023, we'll have a radically new structure, you know, at least for power conversion and battery management, where we integrate both power conversion and battery management into a single board, both hardware and software unified. There is only one board between the battery and AC line, you know, versus we have seven boards that we showed you in the Analyst Day. We are extremely excited by that product, and that will help us to get even more cut down on costs as customers expect, you know, the optimal pricing from us. You know, hopefully, I gave you some color. We are, you know, yeah, quite confident of the gross margin trajectory and, you know, we're gonna make a lot of progress soon. Great. Thanks, Badri. I'll pass it on. Thank you. Our next question comes from the line of JP Lowe from Citi. Your question please. Good morning, guys. Question was on the 4 Q margins. I know that costs are increasing, but the margins you said were down due to mix. Can you just walk through what the product mix was and how it affected margins in 4 Q? Well, like what I said, you know, the product mix. You know, we are talking about a drop from 40.8%, I think, in Q3 to 40.2%. So it's kind of very small we are talking about. We just broke it out saying that, you know, beyond storage, we basically exceeded the higher end of guidance, so we're slightly depressed. But, you know, all the comments I just talked about on margins are true, and the margins have been, you know, understandably because of inflation, because of increasing component costs, and because of increased logistics, which I pointed out, there's always pressure on gross margins, but we are able to counter it. That's what we do. We have a world-class cost task force on both microinverters and batteries. We are not stopping to work on anything. We work on capacitors, we work on transformers, we work on semiconductors, we work on resistors, we work on parting. I told you the big stuff like the bulkhead, but we work on numerous things at the same time. We don't distinguish between, you know, microinverters or batteries. The company continues to get healthier all the time. When the component shortages go away, the supply chain constraints go away, the logistics constraints go away, then we'll have structurally better gross margin. Okay, great. Then on the 1Q guide, just wondering if you could break down the growth that we're gonna see in top line 1Q. Can we break it down between volume improvement, and I know we're seeing volume improvement on the storage side of 15%. But I guess break it down between volume improvement on the micro side versus the pricing increases rolling through. Well, the pricing increase is only from March, so it's not gonna be for the full quarter. I would say impact of pricing increase is not gonna be much. In terms of, you know, in terms of microinverters, you all know that Q1 is seasonally down, but yet. Right. Our business is not down. You know, batteries is a 15%, I know, increase. If you assume, you know, $600-$700 or $600-$800 per kWh is the price range, you can calculate it yourself. You can see that there is steady growth on both businesses, both microinverters and batteries. Okay, great. Thanks Badri and congrats, Eric. Thank you. Now our next question comes from the line of Brian Lee from Goldman Sachs. Your question, please. Hey, guys. Thanks for taking the questions. Congratulations Eric on the retirement. You've always been one of my favorite CFOs, so you will be missed, and I look forward to working with you going forward, Mandy. Couple questions, I guess. Just, there's a lot of moving parts here, so I mean, demand's obviously great and you're fixing all the supply chain issues from last year, but can you give us also a sense of, I guess first on the Q1 outlook, how much is ClipperCreek adding? And then can you talk about their margins and what that does to your overall margin profile? And then with the price increase on the batteries, are you seeing or anticipating any demand pull forward in Q1 ahead of the price increase? Is that embedded in the outlook? Just wondering if there's anything into Q1 we should be aware of, and then I had a follow-up. Yeah. We're not breaking ClipperCreek out right now. Regarding gross margins, I already said the gross margins of ClipperCreek are in line with Enphase, so you can assume that. With reference to battery price increase, the price increases are beginning in March, so the contribution for Q1 is a little bit less. But do I think that'll influence demand? I mean, I don't think so. It is fairly inelastic right now. Our backlog is quite high. The customers do understand we are taking care of them whenever, you know, we are able to. They know that we don't pass all of our cost increases. We try to absorb them, and we only pass whatever we feel like we have to. We are gonna give them plenty of time, and that's why it is effective in March. We give them plenty of time to adjust, very transparent to them. We are not worried about demand. Okay, that sounds great. I guess, you know, as a follow-up to that, Badri, I know Q1 is seasonally a little bit weaker. You would anticipate battery demand and volumes, you know, kinda back to that 30% sequential growth that you've been seeing, you know, outside of the slightly slower Q1, is that a fair assumption into 2Q? And then, another kind of question around pull forward. Is your Q1 outlook, I don't think it does, but, do you anticipate having any pull-forward demand from NEM 3.0 uncertainty in California in Q1, or is that something we might maybe see in 2Q? Just wondering if you've either seen any of that or you're forecasting to have some of that in the next couple months here. Thanks, guys. Right. You know, so I'll give you some numbers for context. We grew 53% from Q3 - Q4, and a 15% growth from 100 is not too shabby. That's our comment. Yes, we'd like to grow 30%, but I already told you the comment on our lead time is 14-16 weeks. Our backlog is very strong. Our lead time is 14-16 weeks due to logistics. The logistics situation will ease up every quarter a little bit. We expect to continuously grow. If it is, you know, yeah, whether it'll be 30% or not, I cannot make a comment on, but we are very happy with our performance on batteries. Brian, the last portion of the question, can you please repeat so I can, you know, answer? Yeah, Badri, just you know, you alluded to NEM 3.0 uncertainty and your opinion on what needs to change. In terms of impact on your business, are you actually seeing any demand pull forward in the state of California due to that uncertainty in your Q1 outlook? Or is that something you know, maybe anticipate would start to show up in Q2 if that uncertainty around NEM 3.0 continues to persist? Thank you. Yeah. If I were to see the situation before December and after December, I wouldn't say, you know. If I were to extrapolate to the situation, I would not say there has been a pull-through. I'm not sure if I can predict Q2, but you saw that the PD decision is delayed. I don't know when the new schedule is, but that's good news in general. I guess the installers are taking a breather right now. All right. Thanks for the call. Appreciate it. Congrats Eric. Bye. Thank you. Thank you. Our next question comes from the line of Julien Dumoulin-Smith from Bank of America. Your question, please. Hey, good afternoon, team. Congratulations, Eric Branderiz. Let me start with an easy one, and I'll follow up with a more complicated one here. Just, on the share buyback, just can you guys talk a little bit more to the thought process, and further authorization? Obviously, just incredible year if you look in past tense. Prospectively, it looks like trends, as you've already articulated, look pretty robust. Shares obviously reacting. How do you think about that and further authorization? Yeah, I mean, our general philosophy is anti-dilution. We look at okay how do we compensate for that? You know, we decide to do share buyback. We first look at do we have enough capital for the needs of the business, the daily needs of the business? Do we, you know, if we want to invest in contract manufacturing lines, if we want to do something on batteries, do we have capital for that? That's what we see first. You know, we basically look at okay are there any M&As that are in the hopper where we can truly increase the value of the enterprise? We look at that next. We evaluate a lot of companies every quarter. If we find we have enough for number one, we have enough for number two, then we go down to number three. Number three, what we say is, okay, am I confident that the share price today is below the conservative intrinsic value for the company? I look at that, and then I make decisions. I may not hit it. I may not get the lowest stock price, you know, over a period, but I know I bought it because I consider the stock price below the intrinsic value of the company, and that to a conservative value. That's our thought process. For this year, we did roughly over 3 million shares, which was about 2.4%. It's a pretty healthy number. You should expect that philosophy from us going forward. We still have about $200 million left out of the $500 million authorized by the board, and we will execute on it when we think the time is right. Got it. All right, excellent. I wanna revisit the storage conversation just a bit more, just to tie a couple things that you said back. I mean, given the lead times that you described, I mean, conceivably, you have visibility into, you know, well in the second quarter, as you start to think about that 16 weeks out and what that means on your thought process here. I mean, you also said you're not gonna comment on when you break that 180 MWh threshold here, but can you elaborate a little bit more on how you're thinking about the year shaping up on them, especially given the potential pull forward that could manifest once you get clarity on that policy, as well as just the underlying demand? I mean, as you've already alluded to and has already been discussed, demand seems strong. You've posted good numbers, Q4, Q1. Conceivably, you've got some degree of visibility into the year. I mean, maybe a little further parameters on how you're thinking about even stacking and, you know, securing supply around what a number above 180 might look like as well. Yeah. I mean, just to tell you are right. Lead time is 14-16 weeks, so we have good visibility on the situation in Q2. Because now we have time for Q2, we are getting things ready. Like what I said, our business is very strong, but we're not gonna guide Q2 for now. I'm gonna have Raghu talk about the NEM situation and how he sees that playing out. Yeah. With regards to NEM 3, you know, the original decision, which was supposed to happen now, had it come into effect at least four to five months after the decision was made. It also required additional time for the utilities to gear up for that change. Realistically, it was, you know, late 2022 or even in 2023 when it would come into effect. I think from a pull-through in demand would probably not be seen in at least for the next few quarters. It's likely gonna be. If NEM 3 holds in its current form, which may not be likely, demand pull-through is likely to happen end of the year or even sometime early next year. Got it. All right. It sounds like everything's good, but a little bit early to talk about exactly how that compares versus the earlier guidance, right? Yep. Excellent. All right. Wish you all the best of luck. See you soon. Thank you. Our next question comes from the line of Colin Rusch from Oppenheimer. Your question please. Thanks so much. Guys, as you start investing in some of the software applications and have the, you know, the remote upgrade possibility, how are you thinking about the business model and the revenue model for some of those software upgrades? Is it still, you know, included in the functionality of the hardware or is there another line item that we might start thinking about in the next couple of years? You know, it's still included in the functionality of the hardware. The way we think about you know, of course, we have businesses like, you know, Solargraf. We have businesses like Pronto now, which are software type businesses. If you ask me in reference to, you know, upgrade features, et cetera, the way we think about it is we want to offer more and more and more features utilizing machine learning and AI, but with a view to improve customer experience. The data that we collect, you know, consumption data, production data, we have, we're not gonna monetize it, in the traditional sense, and we are not gonna aggregate the data and do strange things with it. Rather, what we are going to do is we are going to look at patterns in the data. We are going to basically develop algorithms. We are going to do regression. We are going to ensure that we improve the customer experience going forward. We can do production forecasting. We can do consumption forecasting. We can do grid services events properly. We can figure out if it is possible to predict the grid stability and provide, you know, customers an earlier warning before. All of those for us belong to the customer experience bucket. Our belief is if we do that properly for customers proactively, they're gonna choose us all the time, every time. Got it. That's helpful. I'd love to get an update on the state of the NOL and when you're gonna start having to pay cash taxes and how I should think about the tax rate as we get into that year. Sure. I can answer that one. Currently in U.S., we don't pay material income taxes. We still have sizable NOL. For the upcoming 10-K, you will see on Friday, we are going to file. We have more than $150 million of federal NOL. Also we have federal and state R&D tax credits. Between this year and next year, we don't expect to pay any significant taxes in the U.S. Great. Thanks so much, you guys. Thank you. Thank you. Our next question comes from the line of Mark Strouse from JP Morgan. Your question please. Yeah. Thanks very much for taking our questions. Eric, congrats again, very much well deserved. Badri, I wanted to go back to, you talked a lot about, you know, supply situation on this call. Wanted to go back to the 3Q call, though, when you talked about specifically the IQ Eight and the potential for supply constraints there for just the ASICs, given your early read on demand. Can you just give us an update, you know, specific to IQ8? Do you still see that as, you know, something worth monitoring this year? Of course, it's always worth monitoring, but the situation is a little bit better. IQ 8, we started ramping IQ8 in late December, so shipped a little in Q4. IQ 8 uses. I mean, the overlap between IQ 8 and IQ7 is quite high, except for the ASIC, as you rightly pointed out. We don't see any problems with respect to that ASIC, you know, supply, you know, right now. We would be heavily ramping the mix of IQ8 versus IQ 7. That's our preference going forward. Okay. With the facility you're looking at in Europe for microinverters later this year, anything you can share yet regarding the potential output of that on a, you know, microinverters per quarter or per year type metric? We haven't finalized the location or the contract manufacturer yet. We are well under negotiations there. Typically what we do is when we install a contract manufacturing facility, we put something called as a complete auto line. One full auto line is fixed. That's about, you know, 750,000 microinverters a quarter. You can model that saying, you know, we will have likely a full auto line, and we need to finalize the location. We are gonna try our best to get it operational by end of the year, and it'll be capable of producing 750,000 microinverters per quarter. Perfect. Okay. Very helpful. Thank you. Thank you. Our next question comes to the line of James West from Evercore ISI. Hey, good afternoon, guys, and congrats on a nice strong finish to the year. Also congrats to Eric and Mandy. I look forward to working with you going forward. I wondered to continue on the path of Europe here. I mean, you're pretty excited. You talked about rapid growth. What do you see driving that growth the most in Europe for you? What made you kind of make this decision to build a facility in Europe? Yeah. Europe, we are excited at the prospects of growth there. We grew double in 2021 compared to 2020. You know, Europe has been a little bit more advanced than the U.S. in terms of solar. Basically, the adoption is quite nice there. We are very strong in, you know, Netherlands. We're very strong in France. Belgium, we just introduced storage in addition to solar that's nicely ramping. Germany is one of the very exciting markets in Europe, which is probably over 1 GW, 1 GW solar and 80% attached of that for storage. The reason it's 80% attached is most people do self-consumption because of feed-in tariffs there. They don't have net metering. You know, feed-in tariffs. You know, storage is strong. Actually, Italy, we are entering Italy. Through our partner, Maxeon is our partner as well, and they, you know, with the help of AC Modules, we are going to be, you know, ramping on solar in Italy. Now we are going to add storage in Italy. Spain is very strong. Poland is strong. You know, U.K. is starting to ramp up. We have pockets of. Yeah, actually not even pockets. I'd say many countries which are in the process of ramping both solar and storage, and we have plans to introduce, you know, storage through the year, you know, one or two countries every quarter this year. In general, we are extremely excited. In the Analyst Day, if you see in 2019, I told you we had a handful of people in Europe, like Right you know, five or six people. Now, you know, that team, we have probably 35-40 people today. Right. We've increased those. We are gonna continuously ramp that team, and they're doing well. Okay, great. Then on the IQ8, you talked about, you know, the real supply issues that you're heavily ramping the mix of IQ8, or you plan to. Does that suggest that perhaps that normal four to six quarter adoption period could be on the shorter side? No, no. I said I plan to. I'm not heavily ramping yet, right? Because we've just started. Got you. Okay. Just started. We shipped it. Late December is when we started ramping. Typically, our profile, I would call a successful ramp four to six quarters. Right. That's what I call a successful ramp. We expect IQ 8 to fall within that range. You know, having said that, we do have installers, for example, like Semper Solaris. We did a press release. You know, Semper Solaris switched to us because of IQ 8. Right. Many installers love the sunlight backup feature. They love it. They may not, you know, use it as a significant fraction, you know, but they love the fact that it's got technology and that they can use it if they want to. They'll buy IQ 8 over IQ 7. Right. Got it. Thanks, Badri. Thank you. Thank you. Our next question comes from the line of Kashy Harrison from Piper Sandler. Your question, please. Good afternoon. Congrats on the quarter, and Eric, congrats on the retirement. Thank you. On your question, but if there weren't any logistic-related challenges today, in that theoretical world, do you think that demand would be closing in on your 180 MWh of cell supply capacity today, or is that maybe a bit too optimistic? Well, you know, I'm not gonna break out numbers, but the demand is very strong. Okay. Maybe a question for either Eric or Mandy. I know margins, or gross margins for batteries aren't as high as the gross margins for the inverters. I was wondering if you could maybe talk a little bit about the incremental OpEx associated with battery sales. Basically I'm wondering, you know, if since the channels for inverters and batteries are so intertwined, does the gross profit from batteries just go straight into the operating income line with no real impact to OpEx? You know, would you expect, you know, an increase in OpEx as you ramp batteries as well? Well, we don't look at it like that. We basically, you know, yeah, regardless, you know, the company is modeled on OpEx. Our baseline is 35%, you know, 15% and 20%. You know, time to time we may be a little bit higher on the OpEx side, but we will always be well above the operating income. But we don't think about OpEx like that. For us, we think about a full system. When we think about a full system, it is a micro-inverter, it is a battery, it is a gateway, it is a system controller. When you combine all of these together, I forgot load control, I forgot EV charger, you know, generator compatibility. When I combine all of those, the number of interactions explode means our, you know, our R&D has to scale up. They, you know, we cannot scale up R&D randomly. It will scale up as a fraction of revenue. We have been disciplined there. It's a long-winded answer, but, you know, we invest at a system level, and it is not, you know, batteries versus micro inverters. Everything has to scale up in the company. Thank you. Thank you. Our next question comes from the line of Joseph Osha from Guggenheim Partners. Your question, please. Hi there. Eric, we look forward to hearing what your next venture is gonna be. Two totally unrelated questions. First, regarding grid services. You've talked about the progress you're making there. Are you typically working with someone that aggregates and manages resources like a Stem or an Enbala or an AutoGrid? Or is this a situation where you're providing a functionality all the way to facing off to the utility? We do both business models. We work, for example, in the ConnectedSolutions program, we work with an aggregator called EnergyHub. They work with the three utilities and, you know, the three utilities I talked about, and we work in that model. You know, having said that, our relationships are getting better with the utilities, and we are starting to work directly with the utilities. The APS program. Okay. You saw that. You're gonna start seeing more announcements like what I said, we have a dozen grid services engagements in the pipe, and many of them are working directly with the utilities. We do have all of the software capability. All of the VPP capabilities. Okay. Dispatching, you know, a fleet at an aggregate level. We can provide that software to the utility, and they can utilize that software to control an Enphase fleet. Okay, that's interesting. You've got that whole stack. Thank you. That's. Of course. Very helpful. Totally unrelated question. Looking at your success in Europe, obviously that market's growing. If you had to sort of split up your growth there into market growth versus share gain vis-à-vis you know still some of the fairly large legacy string inverter providers there, I'm wondering how you might think about that. You're talking about with, you know, with reference to Europe? Yeah. Yeah, sorry. That was a convoluted question. Let me try it again. How much of your growth do you think is coming from just the market growing in Europe, and how much is coming from taking share? Yeah, I would say mix of both. You know, obviously the market is growing and therefore we get our fair share, especially in places like Netherlands and France. Primarily what moves competitors or, you know, what moves customers to us is our quality and our service. As long as we are able to maintain our target 500 DPPM, which is 0.05% annual failure rate, as long as we are able to maintain it on microinverters, as long as we provide outstanding customer service 24/7 to customers, you know, we think we have the upper edge there. That's- Right. That's a big reason why customers move over to us. Yeah. The reason I'm asking, and I'll go away in a minute here, is that, you know, in the U.S. obviously it's just down to you and one competitor. In Europe, it definitely is not. I'm just wondering if we could plausibly imagine a future in a couple of years where really it's only you and your main competitor, and some of these string inverter companies just go away. Well, I mean, look, we can't predict the future, but the reasons are very similar. People are tired of enduring bad quality product, and that's the single most reason they come to us. We are a little bit, yeah, you know, expensive, but you cannot be looking at pricing in a vacuum. You gotta be looking at the entire cost of ownership. You know, as long as we maintain our quality, like what I said, that's the most important thing, which we are committed to, and the customer experience that cannot let us down. We'll continue to gain share. Thank you. Okay. Thank you. Thank you very much. Thank you. Our next question comes from the line of Ameet Thakkar from BMO Capital Markets. Your question please. Good afternoon. Thank you for taking my question. I think most of my questions have been asked. But I was just wondering if you guys had any sense or color on how much of the battery capacity you've delivered to date it's been for customers that are actually retrofitting existing systems versus a kind of new solar PV plus storage installations. Was that included, the retrofit opportunity, was that included in your, I guess, Analyst Day presentation when you guys talked about a serviceable addressable market of 1.5 GWh? It's hard to track, but I would say that is a good healthy mix of both. That's what I would say. You know, obviously when they have Enphase microinverters, they would prefer Enphase batteries. Great. Thank you for that. Congratulations on the quarter. Thank you. Thank you. Our next question comes from the line of Praneeth Satish from Wells Fargo. Your question, please. Hi, good afternoon. Can you talk about the IQ8D and how that rollout is progressing? I guess for the small commercial market, is it enough to win over the installers that serve this market? Do you need to ultimately partner with someone like a developer to really accelerate deployment into the commercial market? The IQ 8D product is a little bit late. As you know, I thought we would be in production in Q1, but we are a little late. The reason why we are a little late is, we would like to take the time and do the full system. When I say the full system, I mean it is not just a microinverter which is already qualified and, you know, past compliance. It is you know, the gateway, the cloud software, the fleet management, the design proposal software, the permitting, you know, software. The reason why we like the small commercial market is because it is an extension of residential market. In residential, we service up to 20 kW. That goes from, you know, 20. Small commercial goes from 20 - 200 kW. Why is that important? Yes, the same long tail installers are the ones who participate in the small commercial markets. That's our focus. That's where we think we add a lot of value because the pain points are the same. It is quality and service. We do have to pay attention to those areas, and the challenges will be a little bit different as we go from 20 kW- 200 kW. You know, we use PLC for communication, and now when you are doing it with hundreds of microinverters, those will be stretched. We look forward to, you know, ramping with those installers we already know and do business with. We can do rapid shutdown as well, you know, easily. That's a major driving force versus other competition. In short, it's the similar install base as residential. We have the relationships already. They need rapid shutdown. They need very high quality. They need great service. It's a natural extension for us from residential. Thanks. Just to follow up, what then is your latest timing in terms of IQ8D? Yeah, like what I said, we are going to ship to select installers for a pilot ramp in Q1, so we'll have a small revenue in Q1. Real ramp will be over the next few quarters. This is not, you know, it's not that when I'm ready, I start ramping immediately from day one. It'll take some time for the market to develop there. You should expect over the next several quarters is when it'll ramp to a healthy level. We broke down those details in the Analyst Day. Got it. That's it for me. Congrats, Eric, on the retirement. Thank you. Thank you. Our next question comes from the line of Steve Fleishman from Wolfe Research. Just a question, maybe to put NEM 3.0 in some context. Could you give us some sense of what percent of revenue is coming from California in your Q1 forecast or from 2021 actuals? Yeah, I'm not sure about the exact number. I would estimate something like, you know, yeah, 20% of our revenue, yeah, roughly. Overall revenue. Great. Separate question, just in some of the—I know, BBBs kind of disappeared from focus recently, but some of the later versions included subsidies for domestic production inverters, including microinverters. Yeah, if we were to ultimately get a bill that had that in there, how quickly could you shift to domestic production? The BBB, the one in debate, is $0.11 per watt credit for microinverters. You know that we will never do manufacturing ourselves. We will enlist the help of our contract manufacturers. It's quite attractive to have a Made in America product with that kind of credit. We do have contract manufacturers who are potentially lined up should this happen. Your question on how long it'll take from when we, you know, I select a contract manufacturer to when we can start ramping in the U.S., would take me six to nine months. Great. Thank you. Appreciate it. Thank you. Thank you. Our next question comes to the line of Sophie Karp from KeyBanc. Your question, please. Hi. Good afternoon. Thank you for taking my question and congratulations again on a great quarter. A lot of questions have been answered. Maybe just a couple from me. First, how do you envision your year shaping up, setting aside, I guess, the unpredictable events such as the outcome of NEM or any major disruptions? You grow so fast that seasonality almost doesn't matter. But should we be expecting maybe some pocket of relative softness somewhere throughout the year based on your seasonal patterns? I think our business is fairly diversified between the different states in the U.S., and not just shipping solar only, but you're seeing that solar plus storage is also, you know, many different states are now, you know, their tax rates are continuing to grow up, well beyond California. It's got California, Florida, Texas, Puerto Rico, Hawaii, East Coast, et cetera. Grid services is becoming, grid services is also continuing to grow. We talked about how fast Europe is growing. You know, over the year, we'll start shipping more storage into newer countries in Europe as well. In general, and as well as countries like Brazil is continuing to grow. What you're seeing is our business being more and more diversified, not only within the U.S., or not only within California, but outside of California, other states in U.S. and other in Europe as well. While we may see these occasional road bumps like a NEM 3 issue here in California, I think the business is pretty robust anymore that we'll be able to absorb those bumps. Thank you. As a follow-up question, maybe if you can talk a little bit about what your views are now on M&A. You recently did a transaction, but fairly small. Is there anything out there, I guess, that you see potentially attractive opportunities in some spaces or some technologies that you may look into potentially doing more deals this year? Well, I mean, we have a strategy. That strategy is basically, you know, selling best-in-class, you know, products for home energy systems to, you know, homeowners through our installers and distribution partners enabled by a digital platform. Components of a home energy system, if you see, we have solar, we have storage, we have grid services compatible to generators, we have load control. We didn't have EV before we bought EV chargers. We think EV chargers is a, you know, they need to be managed, and we bought them for that reason. We have fuel cell partnerships. There's nothing much to talk about it yet. We'll talk about it when we are ready there. That's on the home energy system. We'll continue to add more and more things at a product level there if it is aligned with our strategy. I cannot talk about any, you know, specific companies right now. On the installer digital platform, there are six pieces which I mentioned in the Analyst Day, which is lead management, which is an interesting area for us, and we'll keep you informed when our plans are finalized there. That's a potential area. Design and proposal software, we bought a company, Solargraf, and we are making it, meaning Sofdesk, and we are making it a lot better by introducing shading, by introducing storage, 3D, all bells and whistles. We are making that better. Permitting services, you know, our team in Noida services nearly 30% of the entire North American solar business, solar permitting business. They do that today, and we are gonna make that better in terms of injecting more automation, et cetera. We'll come to commissioning software. There, it's homegrown, and there is no way we are gonna buy a company for that. It's got hundreds of man-years of work in it, and we are gonna make that continuously better. We have a very large team there. Comes the Enlighten mobile app. This, yeah, this is the homeowner app, you know, monitoring, fleet management, et cetera, which again, enormous, yeah, you know, investments, hundreds of man-years, and we will grow organically there. O&M, you saw the investments that we made in 365 Pronto. These are software platform. That's how we like it. We're not gonna get into the, you know, O&M itself. We're not gonna have trucks and ladders, but we are going to enable transactions with a two-sided marketplace. You know, customers on one hand, you know, service providers on the other hand, and we connect both of them with a two-sided marketplace. You know, the two components we have to be thinking of is best-in-class home energy systems, best-in-class digital installer digital platform. Whatever acquisitions we need for that, we will do. But those will likely be small acquisitions. They'll be tuck-ins. There is no silver bullet there. Got it. Thank you so much. Thank you. Thank you. Our next question comes from the line of Tristan Richardson from Truist. Your question please. Hey, good evening guys. I really appreciate all the commentary tonight. Just one from me on the EV charging product. Now that you've had that under the umbrella a few months, I'm curious about the innovation pipeline there and whether it be vehicle to grid or vehicle to home and the potential there to, you know, develop that product or if so, could that be margin accretive, or are you seeing more the EV charging product complementary to just your core Ensemble strategy? Yeah. I'm gonna articulate a little bit on what we are doing tactically, yeah, maybe for the next few months, and then you know, Raghu will talk about the vision on V2H and V2G. We're very happy with the acquisition of ClipperCreek. They already make very high quality Level 2 chargers. They have shipped 110,000 of them. Healthy revenue, growing, and the market is growing at a 40% CAGR, like what we told you at the Analyst Day. Very nice gross margins. Profitable business. We're very happy there. All we want there is immediately we want to do three things. Give them a lot of scale. Scale means only a contract manufacturer can do it properly. Professionalize that. That's number one. Number two is to introduce ClipperCreek chargers to our installers and distributors. Obviously, we need to make sure the supply chain is robust there, and that's why, you know, I said that we need to transfer to contract manufacturing first. Number three, which is important, is I'd like every ClipperCreek charger shipped from the contract manufacturer to have connectivity in it. That connectivity is extremely important because, you know, we need to make these chargers intelligent. They need to be able to support, you know, optimized tariff. They need to be able to support charging on a schedule. They should help, you know, support green electrons. If a homeowner says, "I want to utilize solar for my EV charging," he should be able to pick that preference immediately and make that happen. It should be able to work with our Ensemble system seamless. You know, connectivity will help us on those fronts. Those are the three actions that we are thinking immediately. Then comes, you know, international expansion is another one which I should have said. That's in our short-term focus, which is, you know, Europe is a very big market for EV, so it's obvious that we need to be in Europe. We're gonna be starting to ramp, you know, heavily on that front, you know, ramp our plans there. The last one is bidirectionality, so Raghu is gonna talk about that. Yeah. I think, you know, as Badri mentioned, integrating EV into Ensemble, where you're treating EV purely as a load, brings a lot of value for the homeowner because you can really control, you can decide on what the source of the electrons are, the duration, the rate, et cetera. So a lot of value in the energy management system. But beyond that, EV should not be looked at simply as a load. There's an opportunity to do reverse power flow there, which is fully bidirectional, where you can use the EV for both for things such as grid services as well as for resiliency. So the grid services part would be the vehicle-to-grid part, and then the resiliency part would be the vehicle-to-home part. In the event of an outage, you have this extra significant amount of source there, which is about 100 kWh, can that participate and keep the home microgrid sustained in the event of an outage. Both of those, vehicle-to-grid and vehicle-to-home requires some development. That development includes whether, you know, decisions have to be made, whether you're gonna deliver that energy with DC or AC. It doesn't matter. For us, it doesn't matter. We are open to doing it with both AC or DC or IQ8 is capable of providing a DC interface into the car or an AC. In addition to that, there are a few other things, challenges that need to be solved, like standards development still needs to complete. There are a couple of standards, CCS and CHAdeMO today, but you know, I think there are IEEE standards being developed to figure out how to do this bidirectional power flow. Finally, the grid interaction is pretty complex because now the EV has to be fully compliant to all the advanced grid function requirements. We are diving deep into it. We are laying out the full plan. Regardless of whether we do it through an AC- AC interface or an AC to DC interface, our IQ8s are capable of providing both of those. I think bringing the EV onto the Ensemble platform and providing, and not just being a smart load, but also being a very intelligent source, brings a lot of value for our customers. Badri, thank you. Eric Branderiz, all the best to you. Thank you. Thank you. Our next question comes from the line of Eric Stine from Craig-Hallum. Your question, please. Hello. Just sneaking one in here on ClipperCreek. I know you just touched on that. Just curious, I mean, based on the nature of that product, when you install, roll that out to the installer network, I mean, how do you see that play out, maybe compare it to the storage product? Then curious, you know, how do you think of this, or how should we think of it in terms of attach rates or maybe, you know, capture rate of spend per home? Just anything like that to guide us going forward. Yeah, I mean, regarding the introduction to our installers, we think they will lap it up. They would love it because solar plus storage plus EV charging, you know, infrastructure setting up in your home, they would love that because it ain't that expensive. I mean, with a fully installed, you know, maybe with all installation and EV charger installed will cost you $1,500. And if you couple it with solar plus storage, it might even be lower. And there is, you know, obviously tax credit, et cetera, that are there. You know, we think it's a general positive, and that's why we are excited to introduce it to our installers and distributors and globally as well. Got it. I mean, really in terms of thinking about the growth, it's more about, as you said, getting the contract manufacturer in place, getting the supply chain in place rather than the limitations being, you know, training installers and, you know, attach rates or educating the customer. I mean, this is really about just getting the manufacturing. Yeah. Upside in place. That's right. It's a relatively simple product to, you know, to install. There's some education, but not terribly complicated. Of course, we gotta get the secret sauce right, which is make sure that it is compatible to an Ensemble system and provides that intelligence to the homeowner. In terms of, you know, thinking about the business, you know, I don't need to tell you, but you can correlate the business directly to the growth of EV. If the EVs grow at, you know, 40%, for example, CAGR, these will grow even faster than that. It. Yes, it's gonna be a, you know, healthy CAGR, and we need to get our manufacturing straight. That's why we are moving to contract manufacturing house. Okay, thank you. Thank you. Thank you. Our final question for today comes from the line of Pavel Molchanov from Raymond James. Your question, please. Thanks for taking the question. Just one for me also about ClipperCreek. You mentioned that installer awareness and skill set is not a constraint. In practical terms, what portion of your existing kind of installation customers have any historical background in installing charging equipment in homes? Is there a number or a percentage that you can provide? Yeah, I wouldn't be able to provide it now, but I would say that there is probably a 20%-30% overlap. That's my guess. Okay, very good. Bear in mind that installing simple equipment, they already have the main panel open when they're installing solar plus storage. Coming in and installing a piece of equipment on the wall and drawing a conduit for a 40-amp and landing it on a 40-amp circuit is gonna be pretty straightforward. It's the kind of work that they do already with solar and storage. I don't see a huge jump in requirement in training or skill set to do that. Okay, appreciate it. Thank you. Thank you. This does conclude the question and answer session of today's program. I'd now like to hand the program back to Badri Kothandaraman for any further remarks. Yeah, thank you for joining us today and for your continued support of Enphase. We look forward to speaking with you again next quarter. Thank you. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.