Thank you for standing by, and welcome to the Enphase Energy's First Quarter 2022 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. To ask a question during the session, you'll need to press star one on your 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 first quarter 2022 results. On today's call are Badri Kothandaraman, Enphase's President and Chief Executive Officer, Mandy Yang, Chief Financial Officer, and Raghu Belur, Chief Products Officer. After the market closed today, Enphase issued a press release announcing the results for its first quarter ended March 31, 2022. During this conference call, Enphase management will make forward-looking statements including, but not limited to, statements related to our expected future financial performance, the capabilities of our current and future technology and products and the benefits to homeowners and installers, our operations including manufacturing, customer service, and supply and demand, the anticipated growth in the market and in our sales, and regulatory matters. These forward-looking statements involve significant risks and uncertainties, and our 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 our annual report on form 10-K for the year ended December 31, 2021 on file with the SEC, and our quarterly report form 10-Q for the quarter ended March 31, 2022, which will be filed with the SEC in the second quarter of 2022. We caution you not to place any undue reliance on forward-looking statements and undertake 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. We have provided a reconciliation of these non-GAAP financial measures to GAAP financial measures in our earnings release posted today, which can also be found in the investor relations section of our website. Now I'd like to introduce Badri Kothandaraman, President and Chief Executive Officer of Enphase Energy. Badri. Good afternoon, and thank you for joining us today to discuss our first quarter 2022 financial results. We had a good quarter. We reported record quarterly revenue of $441.3 million, achieved non-GAAP gross margin of 41%, and generated free cash flow of $90.1 million. We ramped IQ8 microinverters in the first quarter and started piloting IQ8D microinverters to small commercial customers. We exited the first quarter at approximately 41, 15, 26. This means 41% gross margin, 15% operating expenses, and 26% 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 our financials later in the call. Let's now discuss how we are servicing customers. Our Q1 net promoter score worldwide was 68% compared to 69% in Q4, and our North American net promoter score was 74% compared to 73% in Q4. Our average call wait time decreased to 3.2 minutes in Q1 compared to 8.9 minutes in Q4. We reduced call wait times through staffing and training. During Q1, we added field service technicians in the U.S. and Europe to provide on-site help to our installers, particularly for batteries. Let's talk about microinverter manufacturing. As we have discussed in the past calls, the global supply chain situation is still under stress, but our situation is stable due to supplier management and qualification of alternate suppliers. With the growing demand for our microinverters, we remain vigilant regarding the global supply chain and logistics challenges due to COVID disruption. I'm very proud of our teams who have worked hard to manage this difficult situation. Currently, our quarterly capacity across all contract manufacturing facilities is a little more than 5 million microinverters. Mexico has a quarterly capacity of 2.25 million microinverters. India with Salcomp has 1.5 million, and the rest is in China. To support the increased demand and to improve delivery times to customers in Europe, we are adding an automated line at Flex's factory in Romania. This line will have a quarterly capacity of approximately 750,000 microinverters starting in Q1 of 2023 and will enable a global capacity of nearly 6 million microinverters per quarter. Let's now talk about batteries. Our two sources for battery cell packs currently have a total capacity of 180 MWh per quarter. Our existing cell pack suppliers can add more capacity if needed. We are also on track to add a third cell pack supplier in the second half of this year. Our lead times for batteries are still long at about 14-16 weeks, primarily due to global logistics challenges. The lead time should come down once shipping and port conditions improve. Let's move on to the regions. U.S. and international revenue mix for Q1 was 84% and 16% respectively. In the U.S., revenue increased 9% sequentially and 49% year-on-year. We are pleased to report record sell-through for microinverters and record revenue for batteries in Q1. The channel inventory for both microinverters and batteries were at a healthy level at the end of Q1. In Europe, revenue decreased 6% sequentially, while increasing 39% year-on-year. The sequential decrease was due to unforeseen shipment delays towards the end of Q1. Homeowners in Europe have a strong desire for energy independence. We recently teamed up with 1KOMMA5°, a German installer group, to deliver microinverters and batteries to customers in Europe. We are currently shipping IQ Batteries to Germany and Belgium, and plan to introduce them in other European countries throughout 2022. Our batteries are now compatible with most brands of third-party PV inverters. We continue to see strong growth in our existing markets in Europe, including Netherlands, France, and Belgium, and are also pleased with our growth in newer markets, including Italy, Spain, and Portugal. We expect our momentum in Europe to continue with more than 40% sequential revenue growth expected in Q2 versus Q1. We are continuing to expand the team and are very excited about our growth in the region. In Latin America, revenue increased 13% sequentially and more than doubled year-over-year. We had steady growth in our solar-plus-storage business in Puerto Rico during the first quarter. Now I'll provide some color on Australia, Brazil, and India. In Australia, we expect to introduce IQ Batteries in the second half of 2022. We think regulatory changes designed to improve solar installation practices will favor our safe AC approach as grids and utilities require more intelligent and safer solutions. As for Brazil, we have started shipping IQ7+ microinverters to installers in Q1 and expect to ramp continuously. We also expect to introduce an IQ8D version into Brazil to optimize cost. In India, we are making steady progress in adding more installers into our network, ramping digital sales, and planning to introduce IQ Batteries in early 2023. Let's now discuss the overall bookings for Q2. Our overall customer demand for Q2 is quite robust for both microinverters and batteries and exceeds the higher end of our guidance range. The component availability is better than what we have experienced in the last 18 months, but there are still global challenges which are not specific to Enphase. We remain optimistic that the lead times will come down by the end of this year. Let's talk about batteries. We shipped 120.4 MWh of IQ Batteries in the first quarter, a 20% increase from Q4 of 2021. We are working diligently on improving commissioning times for installers. While we have done various fixes to improve quality and homeowner experience of the battery, we are still not where we would like to be on commissioning and installation experience. We are doubling down on this in this quarter and expect to make good progress. Our goal remains to get the commissioning time down to an hour and ensure installers have a seamless experience. We expect to ship between 130 and 140 MWhs of batteries in Q2. Due to the increase in logistics and component costs driven by inflation, we implemented a modest price increase on our batteries in March 2022. Let's now discuss the installer training and certification on batteries. By the end of the first quarter, we have certified more than 1,300 installers in the U.S. on a cumulative basis. Our hands-on storage training in the U.S. uses mobile vans located in the East and West Coasts, along with regional training centers. We started with an Enphase YouTube channel in Q1 for training, where installers can access videos to learn installation tips and tricks. Let's talk about new products. In Q1, we ramped shipments on IQ8 microinverters in North America and are receiving positive feedback about the product in general. As a reminder, IQ8 solar microinverters can form a microgrid during a power outage using only sunlight, providing backup power even without a battery. IQ8's grid-forming technology eliminates traditional ratio requirements between solar system size and battery size. With our Sunlight Jump Start feature, IQ8 microinverters can start a home energy system using sunlight only after prolonged grid outages that may result in a fully depleted battery. We also expect to introduce IQ8 microinverters internationally into Europe and Australia during the second half of this year. Let's talk about IQ8D microinverters for small commercial applications. We started piloting IQ8D 640-watt AC microinverters to select installers in North America during the first quarter, and we expect production shipments in late Q2. The value proposition of IQ8D is the ease of installation, high quality, and rapid shutdown capability. On batteries, we plan to introduce our next new product, IQ Battery 5P, later this year. This battery will deliver twice the power of our current battery at a lower manufacturing cost, enabling homeowners to start heavier loads. Also going forward, we will enhance our communication using controller area network, which is a robust wired protocol for connectivity between the battery, the gateway, and the system controller. We expect this to further streamline installations and simplify commissioning. Let's now discuss ClipperCreek, an acquisition which we completed in Q4 of 2021. The acquisition is performing in line with our expectations, with reasonable gross margins and profitability in Q1. We are doing a few things to ramp the business. We are introducing EV chargers to our solar distributors and installers this quarter. We are also on track to begin manufacturing EV chargers at our Flex facility in Mexico in the fourth quarter of this year. We believe this will help us scale better and drive down costs. As for new products, we expect to introduce a smart EV charger to customers in the U.S. and Europe in early 2023. This will provide connectivity to the cloud through Wi-Fi, as well as local connectivity into the Enphase home energy system. The increasing penetration of electric vehicles has significant implications for home energy management. The energy consumed by the home will significantly increase with an EV. This increase will drive adoption of more solar and storage, which will enable homeowners to save money and charge their vehicle in a green manner. The large EV battery could also be used for home backup, called vehicle to home, as well as helping the grid in the future, called vehicle to grid. This acquisition plays extremely well to our strength in energy management, ultimately helping the homeowner manage solar, storage, EV, and other home loads. We are in discussions with a few EV makers to enable proof of concept for V2H and V2G features. Let me cover grid services. During the first quarter, we announced that Vermont-based utility, Green Mountain Power, will offer Enphase Energy systems to its customers in a cutting-edge battery lease grid services pilot program. We have previously announced our participation in Connected Solutions covering three utilities in the Northeast U.S., Hawaiian Electric's Battery Bonus Grid Services program, and Arizona Public Service's Residential Battery Grid Services program. We also recently announced a partnership with Swell Energy to participate in VPP programs in California, New York, and Hawaii. We also have many new grid services engagements in the pipeline and look forward to working with utilities and aggregators. Let's discuss the installer platform. We are working on Solargraf Pro, a design and proposal tool with shading analysis, ability to detect obstructions on the roof, and 3D modeling of homes. Approximately 900 installers use the Solargraf tool today. We expect to launch the Solargraf Pro, a higher version, advanced version of the product, in Q2, and already have a few installers piloting the software. In addition, we plan to expand the availability of Solargraf Pro internationally, starting with Germany. In March of 2022, we acquired SolarLeadFactory, which provides high-quality leads to solar installers in the U.S. Our objective is to substantially increase lead volumes and conversion rates to help drive down customer acquisition costs for installers. We plan to expand the team, optimize lead management, and offer this service broadly to our installer network. We have made four acquisitions in the last 15 months to strengthen our installer platform in the areas of lead generation, solar design software, permitting services, and O&M software. In addition, we have robust and homegrown mobile apps for commissioning and monitoring of solar and storage systems. We plan to integrate all of these seamlessly onto one platform and offer them to our installation network, simplifying their lives and reducing soft costs. Let me now give you a quick update on our Enphase Installer Network, or EIN. We have now onboarded approximately 1,200 installers to our EIN worldwide through a highly selective process focused on installation quality and an exceptional experience to homeowners across the globe. Next, I'd like to comment on some recent policy issues that are impacting the U.S. solar industry. As you're aware, the U.S. Department of Commerce is investigating the circumvention of anti-dumping and countervailing duties on some PV modules. This is a time of great change in the energy market. Utility costs are rising, climate change is happening, geopolitical issues are driving energy security, and EVs are taking off. At a time like this, when there needs to be full support for renewables, an AD/CVD investigation creates massive uncertainty in the marketplace, which we believe will impact U.S. jobs, raise electricity prices for homeowners, and increase imports from China, all of which are counter to the goals of the current administration. We are hoping that the current administration takes this problem seriously and resolves it rapidly, well before the proposed August timeframe. As it relates to Enphase, our products aren't directly impacted by AD/CVD, as we don't make modules. Based on conversations with some of our partners, it is our opinion that the module supply for the Residential segment will be less impacted than other segments. Many of our partners are currently working on securing module supply for the latter part of this year. Module pricing is expected to be higher in the interim, and we think the Residential segment may be able to absorb higher prices. All of this further underscores the importance of supporting domestic manufacturing through a production-based tax credit, or PTC, so we can proactively increase domestic manufacturing rather than reacting to such a market disruption. The support of domestic manufacturing is well-aligned with the administration's goals to promote renewables, increase U.S. jobs, reduce electricity pricing for homeowners, and lessen the dependency on imports from China. We would like to see rapid resolution of both AD/CVD as well as implementation of PTC as soon as possible. I would also now like to comment on the California NEM 3.0 proposed decision, RPD, which was announced in December 2021. We expect a modification to the current PD and an opportunity for stakeholders to participate and provide their feedback to the California PUC. We've been actively participating in the process and will continue to work diligently with various stakeholders to try and influence the best outcome. Let me wrap up. Full home electrification is slowly but surely coming. EVs are ramping up, you know, considerably for obvious reasons, so are heat pumps. Climate change, coupled with situations like the Ukraine, is forcing European countries and others to think hard about their reliance on oil, coal, and natural gas. Countries like Germany are leading the way in adopting renewable technologies such as solar and batteries to support heat pumps, EVs, and other home loads. Self-consumption is becoming the norm, and consumers want energy independence. There is no doubt that other countries will follow suit. It is just a matter of time. Our strategy is pretty simple. We create best-in-class solar plus storage home energy systems. We sell them to homeowners through our installation and distribution partners, enabled by our installer platform. Our topmost core value is customer first, and we are focused on providing a great experience to installers and homeowners. We are well-placed to capitalize on the trend towards full home electrification and look forward to ramping our presence in Europe in a significant manner over the coming months and years. With that, I will hand the call over to Mandy for her review of our financial results. Mandy? Thanks, Badri, and good afternoon, everyone. I will provide more details related to our first quarter of 2022 financial results, as well as our business outlook for the second quarter of 2022. We have provided reconciliations of this non-GAAP to GAAP financial results in our earnings release posted today, which can also be found in the IR section of our website. Total revenue for Q1 was $441.3 million, representing an increase of 7% sequentially and a quarterly record. We ship approximately 1,029 MW DC of microinverters and 120.4 MWh of IQ Batteries in the quarter. Non-GAAP gross margin for Q1 was 41.0% compared to 40.2% in Q4. The increase was driven by favorable product mix and lower expedite costs. GAAP gross margin was 40.1% for Q1. Non-GAAP operating expenses were $66.3 million for Q1 compared to $68.2 million for Q4. The decrease was driven by lower marketing expenses, offset by continuous investment in R&D and customer service. GAAP operating expenses were $115.1 million for Q1 compared to $105.6 million for Q4. GAAP operating expenses for Q1 included $45.3 million of stock-based compensation expenses and $3.6 million of acquisition-related expenses and amortization for acquired intangible assets. On a non-GAAP basis, income from operations for Q1 was $114.5 million compared to $97.7 million for Q4. On a GAAP basis, income from operations was $61.8 million for Q1 compared to $57.7 million for Q4. On a non-GAAP basis, net income for Q1 was $109.7 million compared to $102.8 million for Q4. This resulted in non-GAAP diluted earnings per share of $0.79 for Q1 compared to $0.73 for Q4. GAAP net income for Q1 was $51.8 million compared to GAAP net income of $52.6 million for Q4. This resulted in GAAP diluted earnings per share of $0.37 for both Q1 and Q4. We exited Q1 with a total cash equivalents, and marketable securities balance of approximately $1.1 billion compared to approximately $1.0 billion at the end of Q4. In Q1, we generated $102.4 million in cash flow from operations and $90.1 million in free cash flow. Capital expenditure was $12.4 million for Q1 to increase manufacturing capacity as well as costs related to IT infrastructure, R&D equipment, and international facilities. Now let's discuss our outlook for the second quarter of 2022. We expect our revenue for the second quarter of 2022 to be within a range of $490 million-$520 million, which includes shipments of 130-140 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 $127.5 million-$130.5 million, including a total of approximately $57 million estimated for stock-based compensation expenses and acquisition-related expenses and amortization. The estimated stock-based compensation expenses include approximately $4.8 million accrual for the earn-out that are tied to certain performance targets to be paid in company stock for the acquisition. We expect our non-GAAP operating expenses to be within a range of $70.5 million-$73.5 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 on your touchtone telephone. If your question has been answered and you'd like to remove yourself from the queue, please press the pound key. Our first question comes from the line of Julien Dumoulin-Smith from Bank of America. Your question please. Hey, good afternoon. Thank you so much, team for the time. Congratulations on the continued results and performance here. If I can, just kicking it off here, can you talk a little bit more about the European expansion that you guys just emphasized here a moment ago in the prepared remarks? Can you talk about what exactly you're doing to infiltrate those markets, if you will? You obviously talked a lot about training. You know, how should we expect that to filter through in terms of operating expenses and especially against your model on OpEx? Related to that, how should we expect that to filter through on top line as you think about, you know, your revenue mix here in Europe, as well as gross margin impact? Right. Just quick on the background, for Europe. In general, we are quite strong in Netherlands, France, Belgium, and those businesses or those regions continue to grow pretty well on the solar side. The new regions, if we talk about, yeah, actually are Germany, Italy, Spain, and Portugal. Let me talk about Germany. Germany, extremely interesting market. The residential solar is well north of 1 GW a year, maybe even up to 2 GW a year right now on residential. Battery attached, 80%. Most of our installers say, for a given home, when they mean solar, they mean solar, battery, EV charger, and the heat pump. They are much more advanced, you know, probably the most advanced, I would say, in terms of full home electrification. There's an incredible opportunity there for us. The companies that will be successful are companies that can manage all of these resources, solar, storage, EVs, and heat pumps. That's what we do. We make best-in-class home energy systems. You know, now with ClipperCreek, we have an EV charger. We are quite strong in solar and storage. You know, we are working on expanding our sales force in Germany. We are working on business development. We are working with a lot of installers. We are ramping things there at a pretty nice clip. Our natural advantages are we do things with very high quality that Germans care about. We care a lot about customer experience, customer service. That's on our side. We are very optimistic about Germany. I was there. I was there late February to early March with our team, and it's really, really clear that the opportunity is big and now. When you compare to that, the next biggest is Netherlands. Netherlands is primarily a solar market today, but storage is coming according to all of the installers. They're like Enphase a lot, primarily due to the attributes I told you, quality, customer experience. If you go to Italy has been promoting the heck out of batteries. The Ecobonus and the Superbonus program. The Superbonus almost says that the batteries are virtually free. There, we are going to participate with some of our partners. These programs will extend multiple years. May not be a Superbonus, but at least the Ecobonus will be there. Spain, for example, we have a natural advantage because of small systems in Spain. Each country needs to be understood well because you go from Germany, you have 12 kW, 13 kW of PV. You go to Spain, which is probably 4 kW, 3 or 4 kW of PV. Each market is different, requires in-depth understanding. We are going to be there. We are going to have sales force in each region. We are tripling down on Europe in terms of spending, so there are no barriers there, and we are doing well. In fact, this quarter, the second quarter, we expect our revenue to be 40% higher than the first quarter. With regard to our OpEx, you should continue to think of our OpEx as right at the baseline. We are very disciplined as a company. Our OpEx is, you know, our baseline numbers, financial numbers are OpEx equals 15% of sales. That's the number that you need to be thinking about. Excellent. Yeah, thank you. Just super quick, if I can ask you to elaborate here as well. Just the 15 MWh increase quarter-over-quarter on the battery side, just what are you seeing on margins today? Do you feel comfortable just given the macro that you elaborated on in the prepared remarks, especially relative to raw material inflation? How do you think about price inflation, again, just to pass that along, or how are you thinking about the battery part of the mix, both in terms of the trajectory and acceleration as well as the price points that you're entering at to maintain margins? We don't break out the individual products. We don't break out what is the gross margin on microinverters and what's the gross margin on batteries, but-- On a weighted basis What we do is our baseline gross margin is 35%. We never launch a product that does not have the capability to hit 35%, and we are maniacal about costs. You see, last quarter, we guided 38%-41%, we landed at 41%. Regarding your specific question on raw materials, yes. You know, cell pack costs have been a little bit up because our suppliers are facing issues in their supply chain too, and we already said we are doing a modest price increase effective March on batteries. That'll keep the gross margins in check. We are quite healthy on overall gross margin of the company. Excellent. I'll leave it there. Thank you, guys. Best of luck. Congrats again. Thank you. Thank you. Our next question comes to the line of Mark Strouse from JPMorgan. Your question please. Yeah, good afternoon. Thank you very much for taking our questions. In the past, you have talked about how your order visibility into the coming quarter has either been in line or even exceeded at times what your guidance has been. I understand what you're saying about your supply chain being stable at the moment, but just given AD/CVD, you know, lockdowns in China that are happening maybe in other areas of the value chain, can you just talk about where your visibility into your 2Q guidance stands as of today? Yeah. We got a lot of visibility into the second quarter, and we got visibility into the third quarter in terms of backlog too. You know, we only guide this quarter, meaning the second quarter, and we are very comfortable with these numbers. Like what I said in the prepared remarks, our demand is quite north of the higher end of the guidance range. Regarding COVID shutdowns in general, you know, we are also seeing some shutdowns in China, but our factories remain open. The shipping lines remain open. There are hiccups in raw materials getting into manufacturing in China from time to time, but we are managing it. The situation regarding component availability is obviously much better than what it was last year for us. We have made all of the necessary, you know, adjustments there. We have a number of suppliers for each part, so we have learned how to mitigate our risks a lot. You know, I cannot predict what's gonna happen tomorrow, but you know, I can say right now our situation is quite stable. Okay. Thank you. Just a quick follow-up to Julien's question on Europe. You mentioned the new markets you're entering into. You're obviously signing up new dealer partners. I mean, the 40% growth that you're talking about in 2Q, how should we think about that as far as market share gains versus just market expansion? I think it's both. I mean, in places like Netherlands, you know, in Germany, I would say the market is growing so much it's part of market expansion. Of course, we do take market share because of our quality and customer experience. I can't quantify, you know, how much is each, but yeah, I would say that it will be a healthy mix of both. You know, regarding new regions, like Spain, et cetera, they come to us because of our quality. Even in Netherlands, you know, we continue to gain market share because of our service and quality. In Germany, we do gain market share from some string inverters, because of, you know, one is we do supply all the components. We can do both solar plus storage, and we can manage the complete home energy system. In the future, we can add in EV chargers. In the future, we are able to work with heat pumps as well. They like our capability as energy management, you know, home energy management supplier, and sometimes we get, you know, the nod because of that. It's a multitude of, you know, both. Got it. Okay. Thank you very much. Thank you. Thank you. Our next question comes from the line of Philip Shen from ROTH Capital Partners. Your question please. Hi, everyone. Thanks for taking my questions. Congrats on the strong quarter. As it relates to the lockdown in Shanghai, was wondering if you could drill in a little bit deeper on the potential impact, if any, on the cell supply. As another follow-up on batteries, you know, with rising battery chemistry costs, can you talk through how much you can reduce your battery COGS ahead as you reduce the board count from seven to one with the new chip? You know, can you keep margins flat, for example, without raising prices? Thanks. Yeah. As far as the cell supply is concerned, right now we have two sources of cell packs. Both of them are situated in China, and we are adding a third cell pack supplier in the second half of the year. You talked about the lockdowns. I explained it in terms of the lockdowns, our factories are still operating in China. Our shipping is still active. The batteries are generally on the boat with a lot of weeks in advance. Now we are planning for a long cycle time, 14-16 weeks. We are able to absorb any minor disruptions. We don't see a big deal on the battery side. On the microinverter side, I was mentioning about some of the connectors, you know, some raw materials. We see some hiccups from time to time due to COVID disruptions, but so far so good. Like I said, I cannot predict tomorrow, but, you know, so far it seems to be okay. On the battery costs, there are a couple of ways that we are working on battery costs. First is obviously, you know, the cell pack costs. For that, we have multiple sources of cell packs, and therefore we do all the standard price negotiation. We are also sensitive to their increasing costs, and there is limited things we can do in the time frame, but there's a lot of things we can do partnering with them over the long term in terms of optimizing the battery pack. In terms of what we can do, is what I call the overhead, meaning you have the cell pack, and then you want to convert that cell pack from DC to AC. This involves battery management, power conversion, and associated electronics. That's where I think we can add a lot of value, which we are. First thing we are doing is the battery that's coming out in the second half goes to a slightly higher modularity, meaning instead of 3.3 kWh, we are going to 5 kWh, so we can amortize the overhead over the 5 kWh, making the overhead less. In addition, that battery has got double the continuous and peak power. That got natural cost advantage due to the amortization, the higher modularity. In addition, it provides customers with a superior customer experience compared to our current generation batteries. On top of that, we are going next year into our next, you know, what I call the next generation battery, where we are taking, you know, individual microinverters, the same microinverters that we use on the rooftop, plus extra battery management circuitry, plus a bunch of, you know, connector boards. We are taking overall seven boards and collapsing them into one, which is integrating the battery management plus power conversion into a big microinverter, as well as, you know, utilizing some advanced technologies and a unique architecture, which we call as a full bridge architecture. That one will help us do a very high-power microinverter, and we basically will be able to cut the volume of the battery almost by 40%, because everything is consolidated into a single board versus seven boards. The energy density of the batteries is going to be up almost by 50%. The volume is gonna be cut by 40%, and it's gonna be much easier to install. Along with this deep integration comes cost reduction. Quite significant. We're not ready to quantify yet, but definite reduction in manufacturing cost for us. You know, all of these initiatives. Great. That's really That's really helpful. Yeah, all of these initiatives with basically blocking and tackling for the present, going to the high-power battery for the second half, and the next generation battery for 2023 will continuously improve our gross margins and also enable us to do the appropriate thing for customers in terms of price. Great. Thanks, Badri. Next question here is on IQ8 versus IQ7. Our work a couple of months ago suggests that you were and are forcing top customers to IQ8 from IQ7, starting this quarter in Q2, due in part, I believe, to some chip issues for the IQ7. Can you talk through that a bit and also the mix of IQ8 in IQ7 by quarter this year. Then what exactly caused the IQ7 shortage? When do you expect it to get resolved, if at all? And does this possibly mean that there could be pent-up demand later? Thanks. Yeah. Just for the record, we never force customers. Customers have their own choices. They can make all these decisions. We are incredibly respectful of them. Sometimes, you know, if the problem is entirely ours, we will be able to, you know, give them the appropriate adjustments for the given timeframe. For some customers, the movement to IQ8, you know, they wanted to be on the latest and greatest product and, you know, they negotiated for a good deal to transition faster. Each customer there is a story. Each customer is unique, and we don't force anything wholesale on customers. That's one. Number two, what caused the issue? IQ7 uses an ASIC, and that ASIC is made in a foundry in Taiwan, TSMC. Basically, you know, in general, the foundries are on allocation, and so we basically were short of that ASIC. The beautiful thing is IQ8 uses another foundry from another manufacturer, and there is plenty of supply there. Basically, we were able to mix and match, you know, IQ7s and IQ8s, and were able to support customers. We were happy that we supported customers. For some customers, you know, we gave them some concessions for that quarter where it in your language it seems like we forced them, but in reality we didn't. In terms of the customer conversion, I've always said it takes us four to six quarters to convert from sevens to eights. You know, in the first quarter, of our total shipment of overall microinverters, 20% of them was IQ8. Meaning Q1 I'm talking about. It's just math, as I said. When you take 100% divide by five, that's 20% a quarter. Next quarter we roughly expect that. You know, sometimes it may take five, sometimes it may take six, sometimes it might take four, it depends. North America, we expect that transition. For Europe, we are gonna introduce IQ8 in the second half of 2022. That will come with its own transition there. Bottom line, IQ8 is going quite healthy. Great. Thanks. One very, very quick follow-up on EU. You already talked a lot about it, but wanted to see if there's potential for a new line beyond the one you've already talked about, which is 750,000 units per quarter by year-end. When do you think you might make a decision on yet another line in Europe? I mean, it's easy for us. Once we have Flextronics, great partner by the way, we have a great relationship. We started-- we are starting with an auto line that's 750,000 units. You know, if we think we need more, it only takes us three months. We are now very experienced. We know all the puts and takes it takes to order an extra auto line. So if we need it, we'll pull the plug on ordering it. So we're not worried about that. What's interesting is, and what's exciting is our demand in Europe. I mean, this quarter, like what I said, I think we'll ship more than 40% compared to last quarter. We are very excited about Germany, Netherlands, like what I talked about. Great. Thank you so much. Thank you. Thank you. Our next question comes from the line of Brian Lee from Goldman Sachs. We'd also like to remind our audience to please limit yourself to one question and one follow-up. Hey, guys. Thanks for taking the questions. Badri, just on the new battery, I was curious, it sounds like it's gonna be higher gross margin than the current battery product you're shipping into the market, but it also sounds like lower cost. Are you gonna be in a position, you know, in 2023 when you're shipping the new battery to be more aggressive on price, so you're driving both volume upside as well as margins on the new battery? Then also, you know, similar to how you give us the progression of new generations like IQ8 versus IQ7, any sense of how much of your mix you would target for the new battery in 2023 versus the current generation? Yeah. The, you know, good question on the next gen battery. T hat's a little bit out, so, it's probably too early to give some numbers out. The idea is generally that, meaning, you know, today we have a extraordinarily, meaning the situation is extraordinary in terms of inflation, supply chain, et cetera. It's not gonna last forever. Eventually, batteries need to come down the cost reduction curve. This provides us, we are healthily placed there because we are reducing the fundamental cost structure of our product. Whenever you reduce cost structure, you basically integrate, you know, you instead of seven boards, you have one board, that's all goodness. It depends upon the situation at that time. You know, you're right, we may use it for market share gains while still retaining a healthy gross margin. It'll. You know, once we come to that, we'll make a decision. Regarding the next-gen battery, I mean, there is no reason why that cannot follow a similar process like the microinverters. In fact, it can be accelerated. If it provides a lot of benefits for customers, like form factor is quite less, and other things, we may be able to do the transition in two-three quarters instead of four-five. We got to get there first. We got to make sure our product is new product is released, and then I think our plans will get more firm. Okay. That's super helpful. Then just my follow-up on Europe, I know there's a lot of questions on Europe, but the, you know, the 40% growth sequential here for 2Q is quite robust. Is some of that a function of? I know that's a VAR reseller market. Are you kind of filling in the channels since you're newer to some of these markets and that's the big growth? How does that translate to kinda what you think sequentially is sustainable through the back half? Like, can you keep growing in Europe at those rates, or is this kind of a big first quarter fill-in, and then things start to moderate? Thank you. Yeah. I mean, that's a good question as well. Is it you're filling the channel for the first time, is your question. That's relevant for new markets. Usually, we are very disciplined in filling the channel or not, and we always look at point of sales. Point of sales means, regardless of what we ship from Enphase to a distributor, are the installers purchasing from the distributors? We have a very meticulous meeting, meaning a review every week where we look at point of sales in Europe by country, by distributor. We look at that. So, you know, there may be a little bit of creating a channel in some regions where we have never shipped before, but that's not the primary reason. The primary reason is, especially for, you know, countries like Netherlands, in general, you know, booming solar. For countries like Germany is especially considering the Ukraine situation, everybody wants to go towards self-consumption and, you know, so basically solar plus storage there. These two are the biggest markets by far, and of course, closely followed by Italy, where the government is making it very easy. All of these three regions. Actually, Italy, you can argue that some of the channel thing is there. At least in Netherlands and Germany, we've been present for some time. I would say more robust growth. Of course, we cannot say whether we are gonna grow every quarter like that, but we'll give you know, we'll do the same thing next quarter. We'll talk about the third quarter. We'll take it one quarter at a time. All right. Thanks a lot. I'll pass it on. Thank you. Thank you. Our next question comes from the line of Colin Rusch from Oppenheimer. Your question, please. Thanks so much. Guys, can you just give us a sense of where channel inventories are right now? I'm curious to understand a little bit, both in the U.S. and Europe, how much of the guidance is really channel fill at this point. Historically, I've always said that reasonable channel inventory is eight-10 weeks, and we don't usually quantify it every quarter, but that's a healthy inventory. U.S., I would say, is quite healthy. Europe, I would say, is a little bit less in terms of channel inventory, and they need product, and that should be obvious because of the demand increase. Great. Then the change in the battery volume, you know, I guess I'm curious what's driving that change. Is there some cost reduction, you know, driving that? Is there an issue at the installer level in terms of placement of that? Just the logic and kind of the purpose of that change and how quickly we can see that shifting to all the product that's out in the field. Well, I mean, the logic is we release new products, and new products get better and better over time, so as simple as that. We, you know, today our battery basically does 3.84 kW of continuous power for 10 kWh battery and 5.76 kW of peak power for a 10 kWh battery. Very often when you have air conditioners and when you have pool pumps, et cetera, what you do, the tendency is to buy a lot more kWh to solve the kW problem. Now, with this, we don't need homeowners to buy kWh just for the heck of it or for solving a power problem. Of course, if they need it for energy, they need it for energy. At least what we take is, you know, right now, with the high power battery, which is gonna be released in the second half of this year, we will be able to support 7.68 kW for a 10 kWh battery, continuous. Something like 11.something kW peak power. We'll be able to start some really nice loads with a 10 kWh battery, for example. That's a customer experience thing. Of course, when we did that design, what we said is, okay, our previous modularity, our batteries that we are shipping today have a modularity of 3.3 kWh. These new batteries, if we have a modularity of 5 kWh, then you can amortize our overhead, what I call is anything other than the cell pack, over a higher kWh, so that gets better. The cost gets a little better, manufacturing cost. Then you go to the next generation, which is in next year, 2023, is we talk about transforming the overhead to something that is, you know, was a lot, to something that's very less. It's seven boards going to one board, which is integrate power conversion, integrate battery management all into one board. Mimicking our microinverter, a high-power microinverter. That microinverter will be like approximately a 2000-watt microinverter. A single board. That single board can be on the side of the cell pack, so you can see a drastic volume reduction of 40%. That's incredible. Yeah, that's super helpful. I'm sorry to cut you off there, but yeah, I appreciate it. Yeah. Thank you. Our next question comes from the line of Kashy Harrison from Piper Sandler. Your question please. Good afternoon. Thank you for taking the questions. First one for me. There's been, you know, just broader concern in the market about a economic deceleration entering Q2 and beyond, you know, just globally. You've already highlighted a meaningful 40% sequential revenue growth in Europe. We know demand is rocking and rolling over there. However, I was wondering if you could just give us a sense of what you're hearing from your customers in the U.S., specifically in April, trying to get a sense if you're seeing any signs of deceleration in U.S. resi demand in April, or it seems like, you know, demand is still strong within the U.S., you know, based on your most recent discussions. Okay. Yeah, demand is very strong in the U.S. As simple as that. That's why we, you know, told you that our, you know, demand is well north of our higher end of guidance, and it is broad-based. We work with a number of installers of all shapes and sizes. We work with long tail installers, we work with big installers, and everywhere the demand is up. We are continuing to take market share in the U.S. You know, that's good. We talked about Europe. Those two are, yeah, the biggest for us. You know, that's good to hear. Maybe just switching gears to the battery side. You said you're adding a third battery supplier in the second half of the year. Can you talk about how much capacity you are adding? Are you adding the third supplier because you anticipate demand up and beyond what your suppliers are currently capable of delivering, or is this more so it's an attempt to get down to that, you know, eight-10-week target of lead times as opposed to where you are right now at 14-16 weeks? That's it. Thank you. Yeah. I mean, we are adding a third supplier and you know, when we actually add it, I'll provide more details on the capacity. You know, I have no doubt it'll be comparable to the others. In terms of the motivation to add, it's all of the above. I mean, we have realized it based upon the last couple of years on supply chain for the microinverter. There are some products that we need five suppliers, and they are critical components. Like that, the batteries, the cell pack, if we don't get cell packs, we are dead, right? More number of suppliers. Yeah, it helps us on everything. Price negotiation, it helps us on supply, it helps us on delivery, it helps us on volume. It helps us on upside. This is a long-term strategy. It's got nothing to do with the short term. We'll continue to add. This supplier is also based in China, and we will continue to look for diversification opportunities elsewhere outside China. That's a top priority for me. Right now, all of our pre-cell pack suppliers are in China. Thank you. Our next question comes from the line of James West from Evercore ISI. Your question please. Hey, good afternoon, Badri. Hi. You've made several acquisitions that are gonna strengthen your installer platform, including the SolarLeadFactory, I guess, was the most recent one. Is the acquisition phase here done? Could you talk about the integration of these businesses and how quickly you can get an integrated product out to the installer base? Yeah. You know, the installer platform has got a few elements to it. Lead generation and management, number one. Design and proposal, number two, with the connectivity to the fintech partners. That's number two. Number three is permitting. Number four is installation and commissioning. Right. Number five is monitoring, and Number six is operations and maintenance. We have made acquisitions on lead management through SolarLeadFactory. They very healthy business, profitable business. They work with about 10 installers mostly. You know, 90% of the revenue comes from 10 installers. They are very competent in lead management. Those installers love them. The name of the game for us is to take that business, generate a lot more leads, increase the quality of leads, make sure those leads have a very high conversion rate into actual installs, and kind of make sure we proliferate the long tail. That's the name of the game on the first one, lead generation and management. Number two. Right. Design and proposal. We bought a company called Solargraf in January 2021. The business is doing quite healthy. I would say this quarter, that business will do 50% higher than one year ago. Essentially, the business services 900+ installers right now. That design tool lacks shading capability, lacks 3D, lacks storage modeling, which we are all fixing right now. Okay. We are piloting that. We are going to introduce it to many more of our installers, and all of them are waiting for it, and it's an opportunity for them to utilize that platform there. Also, another important thing is Solargraf or Sofdesk, that software has got connectivity to various fintech partners. Okay. That's important. You know, ease of access of fintech partners is very important for our installers. That's two. That business doing well. We have lots of plans for it. We are going to introduce these new features. We are going to become the best in class there, and we are patient. We don't expect miracles. It's, you know, steady progress. Now, number three, permitting services. We have a team in Noida, approximately 80 installers. The volume that we do is a lot there. We almost do proposal and permitting services. Meaning an installer says, "Just generate this proposal for me. I don't wanna use the software, just generate this proposal for me." Or, "Here is the details of the proposal, I want a permit plan set from you in 24 hours." We have a large team there. 80 installers doing very well. Again, that, you know, revenue is ramping quite nicely, very profitable. There the name of the game for us is automate the permit plan set so that we can reduce the cycle time from hours to minutes, and we can service the long tail well with highest quality. That's permitting services. Now, installation and commissioning is what we do for a living. Monitoring is what we do for a living. We have over hundreds of man-years invested into the installer app and the, you know, monitoring app for homeowners. Okay. We are continuing to make that better and better and better. We're still not happy with our commissioning on batteries, like what I indicated. Right. That's a major goal for me. It's got a lot of points for me, and we are going to make that better. But we don't need to buy a company for that. We already have homegrown efforts for the last several years. Right. The last one is a new one that we bought end of December, and that one is probably the most nascent of them, is the concept being, it's like an Uber for an installer or Uber for an asset manager. Basically, if I have a problem with a particular asset, and you know, I've already charged the customer for an O&M contract, and I'm short of labor, which happens all the time, you know, the platform can basically find, you know, the platform is a labor marketplace for you. There are about 300 installation companies which are logged into the platform. When you as an asset owner or, you know, you are a service provider want to service a particular asset, but you don't have the manpower to do so because your crew is busy on new installs. You then log into the platform, submit a work order, it automatically gets routed to the next labor service provider who is free. That is a match that happens, and Enphase gets paid for at both ends of the platform as a software fee. That's the newest of them all, which we need to basically introduce that company to our installers. We will not do that unless they have a, you know, the software is high quality, the platform is high quality. We have enough number of service providers on the platform. Those are the aspects we are working on in terms of O&M. I gave you a very long answer, but the way we think about it is, you know, all of these are coming together. We are stitching them all into a seamless flow. Some are basically less mature than the other, but all of them are geared to only one thing: making installers' life simple. Right. I'll stop here. Thanks, Badri. That's great. I appreciate it, Badri. Thanks for the answer. I'll turn it back. Thank you. Our next question comes from the line of Maheep Mandloi from Credit Suisse. Your question please. Hey. Good evening, and thanks for taking the questions. Badri, you have a very large installer network, right, in the U.S. and have access to most developers and installers, right? Is there something you could do to help installers with procuring these, you know, solar modules in the short term, or to ease some of these issues in the supply chain we are seeing in the short term? No, we are not in that business. No. Gotcha. Just two other questions from me. Outside of Europe, how fast is the international business growing in Q2? How should we think about the $1.1 billion of cash used this year in terms of M&A or buybacks? Thanks. I mean, we made five acquisitions in the last, you know, 15 months. All of them are small ones, but they add up. So what are our priorities for cash? We have $1.1 billion, as you noted. Our first priority is to obviously take care of the needs of the business, make sure we have plenty of cash, you know, for working capital, make sure that we make the necessary capital investments on the software side, make sure we invest in anything on batteries that we need. So take care of the current needs of the business. That's number one. Number two, we do have a lot of interesting ideas, interesting pipeline in terms of mergers and acquisitions. Obviously, we are rounding out the digital platform. We are looking at energy management, you know, like what I talked about in, you know, Germany, is leading the way in every home having solar storage, EV, heat pump, and other home loads. Effectively managing that requires a lot of software talent. A lot of, you know, software, including buying companies. Because the market in Germany is reasonably mature, like for example, not all systems may use Enphase, you know, Enphase actually solar. Some may only use Enphase storage, might have third-party solar, might have some of someone else's EV charger and somebody else's heat pump. Enphase needs to come to the party by having a comprehensive energy management software that aggregates all of these together and presents a single interface to the homeowner. That's extremely important. That's what I call interoperability. We are going to do that. That requires heavy investments in home energy management, which we are prepared to do, including considering acquisitions. Of course, we got into EV charging. We think most of charging is going to be done at home. 80% of charging is gonna be done at home. We are always looking for networking opportunities on EV chargers that enable, you know, that basically enable dynamic access, which is both inside and outside the home. We are always interested in software companies there. New technologies, you know, where are we interested? Batteries are something that we are always, you know, also looking for. How can we reduce cost, increase performance? Those are the areas where we will double down. Once we look at that, make sure we have enough cash for the M&A pipeline, then we look at, okay, if we still have cash left over, how is our, you know, what's the current share price? You know, how is the current share price and is the share price below a conservatively calculated intrinsic value? It's nothing more than taking a page from Warren Buffett's book. We do exactly what he recommends, and it just makes sense for us. We did. For example, last year, we bought back, you know, Mandy, we bought back 3.2 million shares. Correct. We bought back 3.2 million shares last year, bought back at $155 a share. If the share price goes down, we will consider opportunistic scenarios like that to do more buyback, provided number one and number two are taken care of. Thanks for the answer. Just quickly on the other portion of international business growth in Q2. You know, internationally, the biggest is Europe. The other areas that we are working on, as I said, you know, Brazil is something that we are very excited about. I haven't talked about it too much, but we have an outstanding guy running Brazil. We have a very strong team, and I think it's a matter of time before which we start seeing meaningful revenues from Brazil. They are going to get the IQ8D variant of the product, which will help them on the cost structure. That's pretty soon. Other than that, we are, you know, ramping up on Australia. We have not introduced our storage yet in Australia, which we are working on, and they should have their storage in the second half of this year. That will provide them some growth. In addition, we are, you know, focusing on other Southeast Asian countries as well. All of them are small efforts, and when they become meaningful, I'll talk more. Awesome. Thanks for the answers. Thank you. Our next question comes from the line of Joseph Osha from Guggenheim Securities. Your question please. Hello and good afternoon. Two questions for you. First, just looking at your installer network and been hearing from different sources that just simple labor availability for the install process has been a bit of a challenge. I'm just wondering if you can comment on feedback that you're getting from your network. Yeah, you're right. I mean, the demand is quite high. The demand is very robust like what I pointed out. Installers are always looking for skilled, you know, labor. When I say skilled, electricians are in very hot demand. Then there is a technician, which is, you know, slightly below electrician. You know, labor is in hot demand. Is that gating the ability of your dealers to get stuff done at this point, do you think? I mean, from our case, you saw our guidance, you saw our demand. Yeah, I'm sure they can do even more, but yeah, right now they are limited by their labor. That's right. Okay. Fair enough. The other question, you know, we've talked a lot about M&A, but in particular as regards grid services, right? You know, aggregating and bidding assets into, you know, frequency regulation markets or what have you. That's pretty challenging. I'm just wondering if you feel like the current skill set you have inside Enphase is sufficient or if that is perhaps one area that you're inclined to do additional shopping. That's it for me. Thank you. Yeah, you know, grid services really is focused on providing capacity, not necessarily frequency regulation at this time. That really is for front of the meter type application. We are focused on the residential market. If you look at all of the grid services programs that we participate in are really focused around that, which means that, you know, during periods of stress, typically around where the grid is stressed between 4:00 P.M. and 9:00 P.M., the batteries get a signal to discharge the batteries for the duration of that period. We really are focused on that market. We have a very strong team. They're doing some very interesting work in how to enable utilities to provide this service very easily. We also have a very easy way for the, you know, homeowner to sign up for these programs through the app. We have a very strong team both on the battery side to enable the battery to discharge, the homeowner side for the homeowner to sign up simply, as well as a platform or a grid services manager, as we call it, where the utilities have very clean, a very simple access, one view access into all of the assets that are available to them. We of course work in some cases with the utilities, but we also work with aggregators. In that case, we provide them with APIs and API access for the entire fleet to allow them to discharge the battery. Yeah, very strong team. As you can see, we have made a significant amount of progress with this team and they're developing very strong tools and products to meet the requirements. Okay. Thank you very much. Thank you. Thank you. Our next question comes from the line of Eric Stine from Craig-Hallum. Your question please. Hi, everyone. Maybe just on the IQ8D, you talked about it a little bit, but maybe if you could expand on. Expand on expectations for the ramp here throughout 2022. Just curious, I mean, what percentage do you think C&I can be of your business if you look out three-five years? Yeah. I mean, remember this, you know, IQ8D only addresses the small commercial market. The small commercial market in the U.S. is, we are talking about a TAM, maybe a little more than a GW. We are talking about small schools, you know, churches, hospitals, small hospitals, gas stations. When I say small commercial, it means 20 kWs- 200 kWs. We think our microinverters can be extended there with the use of IQ8D. Having said that, we just are getting started. We are piloting with about, I would say, 10+ installers. If the pilots go well, which we will find out in the next few weeks, you know, we always make some changes. We always find, you know, issues invariably. We basically will do some tweaks, modifications, and then we will release the product to production. We expect that to happen in this quarter. Then onwards, it is a business that will take some time to develop. We are confident that with our principles, quality, customer service, a rapid shutdown capability, our easy-to-use product, that this will get good adoption. You know, first we'll start off with North America. The market size I mentioned was primarily North America, and then we will extend it to other regions as well. If we are successful, and success means that we are like residential, where we can capture significant share, and then we will look at the next follow on, which is the real commercial, you know, market. For that, we need a 480 product, basically. Okay. Thank you for that. Thank you. Our next question comes on the line of Sophie Karp from KeyBanc. Your question please. Hi. Good afternoon. Thank you for the time. Hi. A couple of questions I have. You mentioned the whole home electrification, and obviously you've been making acquisitions along the lines of, you know, you have an inverter product and storage and now you with the ClipperCreek you have EV chargers as well. And you mentioned heat pumps a bunch of times. I was wondering if that is something that could make sense for you to add as the time progresses to your technology package. How should we think about that? Hi. This is Raghu. The way we think about it is we have this technology, energy management technology platform, and its role is to manage a whole family or disparate set of distributed energy resources. We obviously do solar today, storage, we manage the grid, we integrate generators, and now we are integrating EV chargers as well by making the EV charger very smart, so we can do green charging. But there are other elements also that we need to integrate, and those are heat pumps. Obviously, we will not be selling heat pumps, but our goal is to either develop or buy companies that can, that through software, integrate all of these other heat pumps, et cetera, and other loads as well, and effectively bring them onto the platform. When we bring them onto our energy management platform, we can then manage how the loads get services. What's the most economical, what's the most reliable, and what's the most green way of servicing the load? In the case of EV, for example, if the homeowner may choose, I only wanna charge my car through green electrons, which is obviously the first choice would be your own solar system, or if you get a signal from the grid that says the grid is green at this time, then you can charge from the grid as well. In general, it's about managing all of these different type of resources and we'll do that with software primarily. What you're seeing is a lot of standardization that's starting to take place where all of these different kinds of loads, different types of heat pumps and different types of EV chargers, et cetera, are starting to adopt certain standards. Those standards will make it easier for us to integrate them onto our platform. Great. Thank you so much. This is very helpful. My other question was, maybe, taking another stab at the supply chain situation, right? You have managed the supply chain much better than your peers and competitors, right? Not just your competitors, but other companies in other sectors, right? The large ones at that. What sets you apart, and, like, what makes you more or less immune to these trends at this point? I guess, is that the fact that most of the components you use are more specialized and there's less competition for them from maybe bigger industries? Is that just the location of where the manufacturing facilities are? Like, what should we think about here? I mean, to tell you're giving us a lot of credit. The last year we didn't, you know, we had a supply problem last year in 2021. What we learned from that, the learning is what can we do for critical components, we need to have multiple sources. How can we plan better for critical components? How can we make sure that short-term disruptions. We know there are always gonna be short-term disruptions. How can we smoothen all of those into, you know, what's right for the customers? We've just learned to plan better, and I think planning better and executing on multiple factories, multiple sources. It also helps that we don't have a lot of SKUs. You know, the way we design it is one single piece of hardware with we try all our microinverters to have one single piece of hardware. Then every region, we can load the appropriate grid profile and software so that that can get functioning. In that way, we don't need to make one SKU for one country. We try. You know, it's hard to do. It's hard to reduce the number of part count. You know, many companies bloat up on part counts. But again, I think with the software-defined architecture that we have, it helps us a lot. To answer your thing, it is upfront product architecture, diligent supplier management, qualification of multiple sources, planning better and some luck, too. You know, yeah, hopefully luck is on our side still. Yeah, we don't know what's gonna come tomorrow in terms of COVID disruptions, but I think, you know, it's safe to say that we anticipate and we are prepared for it. Thank you so much. That's all for me. Thank you. Our next question comes from the line of Cameron Lochridge from Stephens. Your question, please. Hey, thanks for squeezing me in here, guys. Good afternoon. Hi. Well, I was hoping we could start just very quickly on this U.S. Department of Commerce investigation. I understand this is on modules, and this is not where you guys play, but you know, you mentioned residential is likely a little bit more insulated from any effects of this. It sounds like your customers are working on module procurement for the second half. If you could just offer any kind of framework for how you're thinking about the potential impact, if any, to your business in the second half. Or even if you want to take a stab at it this way, if you think about your outlook for 2022, how has it changed now versus what it may have been three months ago? You know, really we are not, as we sit here today, based on all of the discussions that we have had with our customers, based on what we see out in the marketplace, you know, we don't see any impact on our business. Obviously, we are expecting, and we have heard that module prices are going up. In our opinion, can those module prices, increase in module prices be absorbed by, you know, by the residential customer? We believe that magnitude of module price increase that we are seeing can easily be absorbed by the customer. Our opinion is that we won't see any impact on our business. Also bear in mind that most residential systems are financed systems. What the homeowner actually sees is a small increase in their monthly payment. We believe that those monthly payments are not gonna be larger than what the utility rate increases that they're experiencing. All of those things point to Residential segment that is probably going to be much more resilient segment than any other segment. That's great. That's very helpful. Thank you, Badri. Then just switching gears to your European strategy. I was hoping you could talk a little bit about your installer strategy there. I mean, you've had tremendous success in the U.S., obviously with the long-tail installers. Maybe just talk about does the same dynamic exist in Europe? Is it different? Basically, just do you think you can replicate your installer strategy that you've had success with in the U.S., can you replicate that in Europe? Yeah. The same principles hold. You know, if you say, you know, U.S. has got a lot of long-tail installers, Europe is even more long tail. Germany, for example, has got 5,000 installers. I think, yeah, I'm not sure about it, but I was told that a top installer is an installer who does, you know, approximately 10-20 MW a year. Basically, it's the same definition holds. The same principles hold for us, is we think those installers will obviously care about quality, care about customer experience. As long as we do a good job there, you know, good things will happen for us. Great. Thanks very much. Returning back. Okay. Thank you. Thank you. Our next question comes to the line of Pavel Molchanov from Raymond James. Your question, please. for taking the question. Two quick ones also about Europe. Obviously in the current geopolitical situation, all of the frontline states in the eastern portion of Europe are in the headlines. Do you see signs that rooftop solar in places like Poland, Czech Republic, Hungary is starting to develop? And if so, will you be playing in that geography? Yes. Obviously, we do pay attention to the regions and pay attention to opportunities that lie, and we'll continue to do that. At this time, we are very focused on the countries that we talked about. We are, you know, the market is really expanding very strongly in the countries that we are already in, which are Netherlands, France, Belgium, Germany and the new markets, which include Spain, Italy, and Portugal. You know, we need to bring all our products. We need to bring IQ8 there. We need to make sure we have batteries in all of those countries as well. You know, right now we are focused on these, but we keep an eye out, right? We pay attention to what's happening in the countries that you referred to. Okay. Last year, EV market share in Europe was four times higher than the United States, 19%. Is there room for ClipperCreek to, you know, get a slice of that infrastructure build-out? There is always room for ClipperCreek. The angle is what I said, which is when an installer basically goes to a homeowner who is even thinking about an EV, there are so many incentives that an installer actually told us, saying, "Even if the homeowner doesn't have an EV, I still install an EV charger." What that means is this: when an installer is there selling the homeowner solar storage, EV charger, and heat pump, you know, in that sale, if Enphase can make life better by having a comprehensive home energy management system, ClipperCreek definitely has its place. We are planning to introduce an EV charger basically into Europe in Q1 of 2023. In the interim, we are working hard to make our system interoperable with other EV chargers so that the homeowner still gets the right experience. Got it. Thank you very much. Thank you. Thank you. This does conclude the question-and-answer session of today's program. I'd 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. Yeah, 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.