Good afternoon, everyone, and welcome to the Enphase Energy's fourth quarter 2024 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Zach Freedman. Please go ahead. Good afternoon, and thank you for joining us at today's conference call to discuss Enphase Energy's fourth quarter 2024 results. On today's call are Badri Kothandaraman, our President and Chief Executive Officer; Mandy Yang, our Chief Financial Officer; and Raghu Belur, our Chief Products Officer. After the market closed today, Enphase issued a press release announcing the results for its fourth quarter ended December 31, 2024. During this conference call, Enphase management will make forward-looking statements, including but not limited to statements related to our expected future financial performance, market trends, the capabilities of our technology and products, and the benefits to homeowners and installers, our operations, including manufacturing, customer service, and supply and demand, anticipated growth in existing and new markets, the timing of new product introductions, and regulatory and tax 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 most recent Form 10-K and 10-Qs filed with the SEC. 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 furnished with the SEC on Form 8-K, which can also be found in the investor relations section of our website. Now, I'd like to introduce Badri Kothandaraman, our President and Chief Executive Officer. Badri. Good afternoon, and thanks for joining us today to discuss our fourth quarter 2024 financial results. We reported quarterly revenue of $382.7 million, shipped approximately 2 million microinverters, and 152 megawatt-hours of batteries, and generated free cash flow of $159 million. Our overall channel inventory remained normal as we exited the fourth quarter. For Q4, we delivered 53% gross margin, 22% operating expenses, and 31% operating income, all as a percentage of revenue on a non-GAAP basis, including the net IRA benefit. Mandy will cover the financials later in the call. Let's cover customer service. Our worldwide net promoter score was 78% in Q4, the same compared to Q3. Our average call wait time decreased to 2.8 minutes from 4.4 minutes. We are working to further reduce wait times by leveraging AI and rolling out software fixes. Let's talk about operations. Our global capacity is around 7.25 million microinverters per quarter, with 5 million in the U.S. In Q4, we shipped approximately 1.7 million microinverters from our U.S. contract manufacturing facilities, booking 45X production tax credits. We also introduced a higher domestic content SKU for two of our products, the IQ8X microinverter and the IQ8P commercial microinverters in Q4, to help the commercial asset owners qualify for a 10% domestic content ITC adder. We now offer higher domestic content microinverters that cover both residential and commercial solar applications and continue to see good demand for these products from lease, PPA, and commercial markets. We expect to ship 1.2 million units of microinverters from our U.S. contract manufacturing facilities in Q1. We also began shipping the IQ Battery 5P, our third-generation battery system, from our U.S. contract manufacturing facilities during Q4, utilizing domestically made microinverters, battery management systems, and enclosures, while sourcing cell packs from China. We shipped 6.7 megawatt-hours of batteries from our Texas contract manufacturing facility in Q4. We continue to evolve our sourcing strategy to maximize domestic content opportunities and diversify our geographic exposure. Let's cover the regions. Our U.S. and international revenue mix for Q4 was 79% and 21%, respectively. In the U.S., our revenue increased six% in Q4 compared to Q3, driven by an 11% increase in microinverter sales. This increase was due to strong demand for our higher domestic content microinverters. Our battery sales were down eight% in Q4 compared to Q3 due to lesser channel restocking, as we had previously anticipated. Our overall sell-through of products was flat in Q4 compared to Q3. We are generally seeing stable demand in the U.S., both in California as well as outside of California. NEM 3.0 currently represents 66% of our installs in California, with a 45% attach rate for our own batteries. The adoption of batteries is steadily increasing across the U.S. due to new tariff structures like NEM 3, VPP programs, and the need for resilience. In Europe, our revenue was down 25% in Q4 compared to Q3, while our overall sell-through declined by 13%. The overall business environment across the region is still challenging, but we are maintaining discipline on controlling the channel and expanding our served available market by introducing new products. I'll provide some additional color on key markets in Europe: the Netherlands, followed by France, Germany, and the U.K. In the Netherlands, demand remains weak but has stabilized. The market is transitioning away from solar-only systems to solar-plus batteries, which avoids export penalties and allows participation of residential solar-plus battery systems in energy markets. We announced new collaborations with two retail energy providers during Q4 that enable homeowner access to dynamic tariffs and participation in the imbalanced markets, both of which can improve payback to better than six years even without net metering. We expect to announce more partnerships with Dutch energy providers in the future and see gradual improvement in this market as we progress through 2025. We also started shipping our new IQ EV chargers into Netherlands in the fourth quarter. In France, the market is slowing down due to the recent utility rate cuts. France remains a key long-term growth market for us, given our leadership and low solar penetration. We started shipping our IQ EV chargers into France in the fourth quarter. We plan to introduce hot water heater compatibility in Q2, enabling homeowners to do heating with excess solar, our green heating. We also plan to introduce backup capability for our batteries, further enhancing resilience for homeowners. As the feed-in tariffs in France gradually reduce, the value of solar-plus batteries, along with home energy management, continues to rise. In Germany, we are excited about a few new products that will expand our reach. In early January, we started shipping the IQ Battery 5P with FlexPhase, a new product to customers in Germany, Austria, and Switzerland. The early feedback has been very positive, and we see an opportunity to increase share in the region now that we have three-phase backup capability. We also recently started shipping our new IQ EV chargers into Germany. In addition, we expect to introduce our IQ Balcony Solar Solution in Q2. We believe Enphase microinverters are ideal for small systems, and this product is expected to increase our served available market in Germany by approximately 400 megawatts per year. A bright spot for us is the UK, where we are growing steadily. We recently announced that our systems are integrated into Octopus Energy's smart import and export tariffs, such as the Intelligent Octopus Flux that is designed to optimize the charging and discharging of solar-plus battery systems, aiming to provide customers the best rates for buying and selling electricity. We expect to start shipping our new IQ EV chargers into the UK shortly in Q1. We are still under-penetrated in many countries in Europe, including the UK, Italy, Spain, Belgium, Luxembourg, Switzerland, Austria, and Poland. While each country faces its own unique challenges and opportunities, homeowners are prioritizing safety, reliability, quality, savings, and an all-in-one app experience for their home energy systems, which aligns well with our core strengths. We plan to introduce our entire suite of products: the IQ8 microinverters, both single and three-phase batteries with backup, the new IQ EV chargers, and the AI-powered home energy management software, along with the Solargraf installer platform across a lot more European countries throughout 2025. We continue to make incremental progress in other regions. In India, our IQ8P and IQ8HC, these are the high-powered microinverters. Those sales continue to ramp, and we began shipping the IQ Battery 5P in December. We also recently started shipping the high-powered IQ8P microinverters into Vietnam and Malaysia, further expanding into Southeast Asia. Additionally, we are building momentum in Thailand and Philippines, steadily ramping up businesses in these growing markets as demand for high-quality, reliable energy solutions continues to rise. Let's cover Japan. We are especially excited about Japan's 1.3 gigawatt solar market, where we recently began piloting installations and plan to ship IQ8HC microinverters in Q2. The Tokyo Metropolitan Government subsidies for MLPE make the market even more attractive for consumers. Japan's solar landscape aligns well with small systems: two to three kilowatts, complex roofs, strong demand for quality. These are all well aligned with our strengths. Let's come to Q1 guidance. We are guiding revenue in the range of $343 million. We anticipate recognizing approximately $50 million in safe harbor revenue in Q1, partially offsetting seasonality. We define safe harbor revenue as any sales made to customers who plan to install the inventory over more than one year. We are approximately 85% booked to the midpoint of our overall revenue guidance. We expect to ship between 150 and 170 megawatt-hours of IQ batteries, slightly higher than Q4. Before we talk about new products, let's discuss the growing importance of energy market participation. In many markets worldwide, REPs, our regional energy providers and VPP programs, are offering homeowners attractive ROI by utilizing their solar-plus battery systems to buy and sell energy. We believe Enphase Energy Systems offers best-in-class reliability, customer support, and API integration, which are important for REPs and VPP programs. We look forward to sharing with you our progress in these markets as we go through 2025. Let's cover new products, starting with IQ batteries. As I said before, our third-generation battery continues to gain traction in the U.S. as well as worldwide. In the U.S., we introduced two key system enhancements to improve flexibility and reduce costs. The first is Busbar Power Control Software, which allows homeowners to install larger solar and battery systems without costly main panel upgrades. The second is power control software for NEM expansion, enabling homeowners in California to expand legacy NEM systems without any penalty. These advancements provide homeowners with increasing flexibility and cost savings and are being well received by installers. We are making excellent progress with our fourth-generation IQ battery, which offers 60% less wall space thanks to its integrated battery management and power conversion architecture. The battery pairs with our IQ Meter Collar and new enhanced combiner, reducing installed costs by approximately $300 per kilowatt-hour for a typical backup system, making us highly competitive across all use cases. We have achieved UL compliance for the meter collar, and we are now working on getting approval from the California utilities. We expect to pilot our fourth-generation battery in the U.S. in the first quarter. The IQ8P-3P commercial microinverter, with its new three-phase cabling system, is ideal for 208-volt small commercial solar installs between 20 and 200 kilowatts. We have over 516 sites in the U.S. with an average size of 40 kilowatts, and the feedback so far has been positive. These three-phase microinverters are now shipping from the U.S. with increased domestic content, offering a 10% ITC added for commercial asset owners, which should drive up demand even further. One more positive thing to note is that our IQ8 residential and commercial microinverters are now in compliance with the Build America, Buy America Act, BABA. Let me provide an update on IQ9, powered by Gallium Nitride Technology. The IQ9 family is built for higher DC input currents, handling up to 18 amperes versus IQ8, which handles up to 14 amperes. IQ9 also supports a wide range of AC grid voltages, including 240 volts, 208 volts, and 480 volts for both residential and commercial markets. Leveraging GaN high-voltage transistors, these microinverters deliver high AC output power of 427 watts and 548 watts at a lower cost. We remain on track to launch IQ9 in the second half of this year for both residential and commercial markets, with a significant SAM expansion driven by compatibility with 480 volts AC commercial systems. Let's dive into EV charging. We started shipping our new IQ EV charger across several countries in Europe, tapping into a $1.4 billion annual market. The next-generation smart charger is designed to work seamlessly as part of our Enphase Energy System or as a powerful standalone charger. Key features of this new IQ EV Charger include dynamic phase switching and fine-grained current control for efficient green charging, dynamic load balancing, ISO 15118 support for AC bidirectional vehicle expansion, and compatibility with MID meter for Germany, as well as compatibility with OCPP Cloud Software 2.0.1, making it a very comprehensive and future-ready solution. In Q4, we began shipping the IQ PowerPack 1500 product to customers in the US and Canada. This 1.5 kilowatt-hour smart portable energy system incorporates all of Enphase's core technologies of power conversion, battery management, and software. You should think about it as Enphase in a box. During the recent LA fires, Enphase donated a PowerPack 1500 along with an organization called Empowered by Light to support relief efforts with some firefighters who were using them to power their communications gear. We are excited to enter this growing consumer market and plan to expand the PowerPack globally in 2025. Let's talk briefly about Solargraf, our installer platform. We added a lot of new features to Solargraf in 2024 with the ease of doing design as a goal. Solargraf is now available to installers in the US, Canada, Brazil, Germany, Austria, Netherlands, France, with plans to expand into more countries in the coming quarters. Looking ahead, we are working on key enhancements to Solargraf, including auto roof detection, ultra-fast proposals, UI/UX overhaul, and expanded C&I features, making Solargraf even more powerful and intuitive. Let me conclude. We successfully navigated a challenging 2024, generating strong free cash flow and profitability while bringing down channel inventory to normalized levels. We entered 2025 with a continued focus on operational efficiency, product reliability, customer service, product breadth, and geographic expansion. We have also doubled down on U.S. manufacturing for microinverters and batteries, which we believe is good for our customers, economy, and for Enphase. There is some uncertainty around government policies for our industry, both in the U.S. and abroad, but one trend is very clear. Centralized grids need more support to keep up with the increased electricity demand. Unsubsidized free markets are increasingly turning to distributed energy systems to help balance the grids through REPs and VPP programs. We see this trend increasing and getting stronger as we look ahead and believe we are well positioned there. We believe our new products will help drive gradual revenue growth throughout 2025, with safe harbor ordering in the U.S. having the potential to accelerate growth as we progress into the second half of 2025. We remain committed to delivering best-in-class solutions and are energized by the road ahead. With that, I will turn the call over to Mandy for her review of our financials. Mandy. Thanks, Badri and Raghu. Good afternoon, everyone. I will provide more details related to our fourth quarter of 2024 financial results, as well as our business outlook for the first quarter of 2025. We have provided reconciliations of 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 $382.7 million. We shipped approximately 878 megawatts DC of microinverters and 152.4 megawatt-hours of IQ batteries in the quarter. Non-GAAP gross margin for Q4 was 53.2%, compared to 48.1% in Q3. GAAP gross margin was 51.8% for Q4, compared to 46.8% in Q3. Non-GAAP gross margin without net IRA benefit for Q4 was 39.7%, compared to 38.9% in Q3. GAAP and non-GAAP gross margin for Q4 included $51.9 million of net IRA benefit. Non-GAAP operating expenses were $83.3 million for Q4, compared to $81.6 million for Q3. The increase was driven by higher R&D expense related to the launch of multiple new products in the first half of 2025. We continue to invest in new products, customer service, and geographic expansion. We implemented a restructuring plan in November 2024 to reduce our operating costs and align our workforce and cost structure with current market conditions. We expect to reduce our non-GAAP operating expenses to be in the range of $75-$80 million a quarter by the second quarter of 2025. GAAP operating expenses were $143.5 million for Q4, compared to $128.4 million for Q3. GAAP operating expenses for Q4 included $47.9 million of stock-based compensation expenses, $2.9 million of amortization for acquired intangible assets, and $9.4 million of restructuring and asset impairment charges. On a non-GAAP basis, income from operations for Q4 was $125.9 million, compared to $101.4 million for Q3. On a GAAP basis, income from operations was $54.8 million for Q4, compared to $49.8 million for Q3. On a non-GAAP basis, net income for Q4 was $125.9 million, compared to $88.4 million for Q3. This resulted in non-GAAP diluted earnings per share of $0.94 for Q4, compared to $0.65 for Q3. Net income for Q4 was $62.2 million, compared to $45.8 million for Q3. This resulted in GAAP diluted earnings per share of $0.45 for Q4, compared to $0.33 for Q3. We exited Q4 with a total cash, cash equivalents, restricted cash, and marketable securities balance of $1.72 billion, compared to $1.77 billion at the end of Q3. As our 2025 convertible is coming due in March this quarter, we plan to use our existing cash to pay off the entire principal balance of approximately $102 million. As part of our $1 billion share repurchase program authorized by our board of directors in July 2023, we repurchased 2,883,438 shares of our common stock in Q4 at an average price of $69.25 per share for a total of approximately $199.7 million. We have a remaining $398 million authorized for further share repurchases. In addition, we spent approximately $5 million by withholding shares to cover taxes for employee stock vesting and options in Q4. That reduced the diluted shares by 68,532 shares. We expect to continue this anti-dilution plan. In Q4, we generated $167.3 million in cash flow from operations and $159.2 million in free cash flow, including approximately $110 million of customer prepayments. Capital expenditure was $8.1 million for Q4, compared to $8.5 million for Q3. We expected our capital expenditure to stay within $50 million in 2025. Now let's discuss our outlook for the first quarter of 2025. We expect our revenue for Q1 to be within the range of $340-$380 million, which includes shipments of 150-170 megawatt-hours of IQ batteries. In December 2024, we signed a Safe Harbor sales agreement for a total amount of approximately $95 million to ship in the first half of 2025. As Badri mentioned, we define Safe Harbor revenue as any sales made to customers who plan to install the inventory over more than a year. The first quarter of 2025 revenue outlook includes approximately $50 million from this safe harbor sales agreement. Although we received a lump sum of $95 million due to safe harbor for expected shipments in the first half of 2025, under normal circumstances, this would have been recognized organically over eight quarters at an average of approximately $12 million per quarter. Going forward, the $12 million should be considered as part of the baseline each quarter to reflect the true run rate of our business. Coming back to Q1 guidance, we expect GAAP gross margin to be within the range of 46%-49%. We expect non-GAAP gross margin to be within the range of 48%-51% with net IRA benefit and 38%-41% before net IRA benefit. Non-GAAP gross margin excludes stock-based compensation expense and acquisition-related amortization. We expect the net IRA benefit to be between $36-$39 million on estimated shipments of 1.2 million units of US-made microinverters in Q1. We expect our GAAP operating expenses to be within the range of $143-$147 million, including approximately $62 million estimated for stock-based compensation expense, acquisition-related expenses and amortization, and restructuring and asset impairment charges. We expect our non-GAAP operating expenses to be within the range of $81-$85 million. We expect our GAAP and non-GAAP annualized effective tax rate, excluding discrete items, for 2025 to be at 18% plus or minus 1% with IRA benefit. In closing, we managed well with our financial discipline through a difficult global environment in 2024. We maintained profitability and strong gross margins. In addition, we generated approximately $480.1 million of free cash flow in 2024 and exited the year with $1.72 billion in cash, cash equivalents, restricted cash, and marketable securities, while repurchasing 4.5 million shares of our common stock for approximately $391.4 million. With that, I will open the line for questions. Ladies and gentlemen, at this time, we will begin the question and answer session. To ask a question, you may press star and then one on your touchtone phones. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys. We do ask that you please limit yourselves to one question and a single follow-up. If you have additional questions, you are welcome to rejoin the question queue. To withdraw your questions, you may press star and two. At this time, we'll pause momentarily to assemble the roster. Our first question today comes from Brian Lee from Goldman Sachs. Please go ahead with your question. Hey, everyone. Good afternoon. Thanks for taking the question and good job on the quarter here. Maybe for Mandy or Badri, just trying to understand the guidance because there's a little bit of moving parts with the safe harbor. So if we take the $50 million out, obviously that's implying like a baseline of $310 for Q1. And if we look at the past three years or so, typical seasonality may be up like high single digits sequentially into Q2. And then we add $45 million on top of that to be recognized as we think about kind of the framework for Q2 modeling. And then just is there visibility for any more safe harbor revenue as you move through the year, kind of second half? What are your customer discussions around that? Yeah. So let me just give a brief on that. The way you should think about the $95 million safe harbor, we think, is this $95 million, if it had not been for safe harbor, would have been recognized over eight quarters. That's approximately $12 million a quarter of core revenue. So when you talk about the $310, I would add another $12 million to it. That makes it $322. So take roughly the $380 million in Q4, $382, and going down to $322, that is in line with about 15% seasonality that is typically expected from Q4 into Q1. To answer your question, is there any more safe harbor deals that will be done later this year? We don't know. But of course, there is some drive towards safe harbor. One is we saw the domestic content guidance basically reducing for inverters as well as for racking. So that's one incentive. The second incentive is obviously if there is anything on the step-downs for ITC, for example, some customers may want to take that into consideration and do safe harbor. So we are having those discussions with the customers, and we will inform you, hopefully, in the next conference call if there is anything more. Okay. Fair enough. And then maybe just a follow-up question. You're starting off the year with some good momentum on the battery storage front, just based on the volume guidance here for Q1. But you're also in the midst of, like you said, piloting the new Tennessee battery. And just wondering how much of this is sort of phasing out the older generation battery? What kind of visibility do you have on picking up new volume, maybe market share as you move through Q2 and beyond on the Tennessee? Should we expect an air pocket, or are you expecting kind of sequential growth on battery storage volumes throughout the balance of the year, similar to kind of what you've seen in past years? Thank you. Yeah. Good question. We do expect to sequentially grow in batteries throughout 2025. If you see what happened in 2024, our sell-through gradually increased through 2024. Basically, let me cover two things. Internationally, we have introduced the third-generation battery, and it was, by and large, a battery that was for grid-tied applications in Europe because the power is relatively stable there. Now what we did, and I'm not sure whether you got it, we have introduced a variant of that battery called FlexPhase. FlexPhase is a battery that is capable of operating in either three-phase or a single-phase configuration, and it can do backup on all three phases. It is perhaps the smallest AC-coupled battery that can do backup on all three phases. And in some regions like Germany, Austria, and Switzerland, backup is more an emotional requirement than a need. So they're all worried about energy security. And so we introduced this FlexPhase battery, and we expect to convert entire Europe to the FlexPhase battery in 2025. So that's the dynamics in Europe. And by the way, every emerging market will need a three-phase battery with backup. The U.S. is a little bit unique. We have single-phase here. And so in the U.S., which we are very excited about, we are working on the fourth-generation battery. That fourth-generation battery has got a much smaller footprint. The wall space is 60% smaller. We are able to do that because we are able to combine our power conversion and battery management. We're able to integrate and achieve a much smaller form factor. So basically, we are very excited about that battery. Another important development there is this battery will work along with a meter collar for backup in addition to a new combiner that will also release at the same time. So originally, we had another component called system controller. That's going away now, replaced by a combination of the meter collar and the combiner, which is substantially cheaper. Basically, all the labor in installing the system controller goes away. Net-net, what happens, like I talked about, we reduce the installation cost by $300 per kilowatt-hour, making both grid-tied as well as backup systems easy to install with Enphase. Following up on that, we have achieved UL compliance on the meter collar. We are now working to gain the approval of the California utilities. We expect to pilot our energy systems in March of this quarter. Then we do expect to get strong traction from installers. We have had multiple meetings with installers. We have introduced the battery. We have had excellent reception. We look forward to ramping and growing the business continuously. Our next question comes from Phil Shen from ROTH Capital Partners. Please go ahead with your question. Hey, everyone. Thanks for taking my questions. Had a few follow-ups on the safe harbor. Can you share with us if there was any safe harbor revenue in Q4? Then of the $50 million of safe harbor in Q1 and maybe $95 total, what's the split between micros and batteries? And then also, can you share who the $95 million safe harbor is with? If you can't share the name, just directionally what kind of player and so forth. Thank you. Yeah. We are not going to share any customer names. The safe harbor is mostly on microinverters. And then the answer in Q4 is there. We defined deliberately this time safe harbor as essentially what we expect will be installed over one year timeframe. There are a few small deals that are run-rate deals that will get consumed in one to two quarters. That happened at a much smaller rate. We do not consider them safe harbor. They are usual run-rate business. The $95 million is what we are considering safe harbor. And you should think about that as $12 million of core revenue per quarter. Okay. Got it. Thank you. Then, in terms of on a go-forward basis, I think Brian was talking about how sequentially Q2 could be up high single digits, quarter over quarter, in terms of growth for revenue. In order to get to maybe $500 million of revenue for the year, do you think you can hit $400 million per quarter of run rate, maybe in the back half of the year? I know you don't want to provide official guidance, but wanted to just get a feel for what the cadence might be for the rest of the year. Then, shifting to tariffs for just a moment, we've written a lot about this anode ADCVD. There could be 850% type tariffs on the anode part of the battery. To what degree are you guys preparing for that? And how can you deal with it overall, given that retroactive tariffs could become effective sometime this month? Thank you. Yeah. We don't provide guidance for the second quarter or the rest of the year. But I'm extremely excited by both our progress on new products. We are introducing a whole array of new products. You saw in Q4, we introduced the new EV charger into a $1.4 billion served available market. We introduced our IQ portable energy system, which we plan to extend in other places. January, we introduced the FlexPhase battery. That is the three-phase battery with backup, smallest AC-coupled three-phase battery with backup. We are making excellent progress on our fourth-generation battery, like what I just now answered. The meter collar has passed UL compliance. We are looking forward to start piloting that product. And then I did mention about IQ9. IQ9, we are also very excited. The IQ9 will provide more power, 10% more power for approximately similar cost. And the early results are looking quite good. We expect to finalize our design in the first quarter, and we expect to start doing verification and release that product. So I do expect to grow throughout the year because we are introducing a lot of new products. We are diversifying. IQ9, for example, will allow us to participate in the 480-volt market, which we haven't participated till now. We are only participating in the 208-volt market. So GaN allows us to do all of those. We expect to introduce that product later in the second half of 2025. So let me stop there. Raghu will answer the question on anode ADCVD. Yeah. So with regards to the anode ADCVD, obviously, it is something that's very new. We are tracking it closely. It's still in investigation. There are still a lot of unknowns with regards to whether it is the anode material being imported in that gets the tariff, or will the entire cell or cell pack get the tariff. In general, our plan is, from a supply chain point of view, is to have geographic diversity, which we have done on the microinverter side, and as well as we are preparing to do that on the battery side. All of these things, given the tariff issues, the ADCVD issues, etc., we are being very proactive, which we have already started in diversifying our supply chain. Our next question comes from Julian Dumoulin-Smith from Jefferies. Please go ahead with your question. Hey, good afternoon, team. Thank you guys very much. Appreciate the time. Maybe just following up on the last series of questions. I know it's a little bit early to guide, shall we say, but obviously, you've got a number of tailwinds here when you think about the IQ9 coming in the back half, also fourth-gen introduction. In theory, you guys have alluded to potentially higher margins, maybe 60% on some of these new products, 45% on fourth-gen maybe, or upwards of. I mean, as you think about those products bleeding into the back half of the year, can we expect a margin uptick? I noticed, obviously, in one Q here, there's a little bit of a downtick here versus what you guys just put up. Is there a mixed dynamic in one Q? And really, as you think about the back half of the year, as those new products roll in, are there any offsets that you would otherwise see? And then related, is there a pricing dynamic that we should be watching as it pertains to the updated IRS cost allocation tables for MLPE, right? I know that that dropped here from 36% to 25% of late. Does that change anything in the pricing and uppricing potentially we might have seen earlier? And could that be a headwind itself? Or conversely, could maybe the dynamics around Powerwall 3 and the separation between the solar qualification versus the battery piece help drive incremental sales and stabilize backdrop a little bit? Sorry, a lot in there, but I wanted to squeeze it all in. Yes. Our pricing strategy is quite simple. We price on value added with respect to competition. We also have a very robust world-class cost program. So I keep getting this question all the time. In the last six years, my answers are the same. We have a pricing team. We have a cost team. We make excellent progress on both, and we basically, if we need to drop price on batteries because we don't add that much value, we will. At the same time, we work on cost reduction opportunities, and the results prove that. Today, we are at a non-GAAP gross margin. Without the IRA benefit, we are reporting approximately 39.7%. The number for Q1, the guidance we gave, is between 38%-41%. You should just interpret that as regular product mix that is fluctuating. So our numbers will fluctuate. Do I expect us to get better? I do expect us to get better in general. I do expect us to improve. For example, IQ9 brings in a lot of tricks with gallium nitride. We are able to go from four silicon FETs to two gallium nitride FETs. Because we are using what is called as a bidirectional switch, instead of four unidirectional switches, we will now use two bidirectional switches. Therefore, there is some intrinsic cost reduction. We expect to be running those FETs at a frequency that is greater than 100 kilohertz in the future. When you run those FETs at greater than 100 kilohertz in the future, you no longer need a big transformer. For example, if you are able to run them at 10 times higher frequency from 100 kilohertz, if you're able to run at one megahertz, you should be able to get a transformer reduction by one over root three, which is a 66% reduction in the transformer size. While we are not there, I mean, we call that internally as moonshot so that we can gain that benefit and give customers ultra small inverters, which are extremely cost competent. It'll help both customers as well as us in terms of gross margin. On the fourth-generation battery, we have excellent levels of integration, and that is about to come in imminently. On the fifth-generation battery, which we are working on, we expect to release our fifth generation. I haven't talked about it too much, but we are always working on N and N plus 1. Our fifth-generation battery will come out in Q1 2026, one year from today. And that also has got a drastic cost reduction associated with it. I'll give more highlights on that in the next call on why. That will use prismatic cells. It's got an energy density that is 50% higher. We'll share more details. So in general, we are making advances in our products that fundamentally improve the cost structure. So while we will price attractively, price based on value that we add to the end customer, we expect our cost to get continuously better. And the combination of which will result in a steady uptick in gross margins for us. Our next question comes from Colin Rusch from Oppenheimer. Please go ahead with your question. Thanks so much, guys. Just looking at some of the activity and payments from the Treasury and some of the weather, can you just talk about how healthy the channel is right now? Are you seeing folks with any sort of liquidity issues? What are you looking at in terms of payables and some or not payables, but receivables and any sort of issues around some of those kind of medium-sized installers that you guys work with? Yeah. I mean, look, we work with distributors. So most of our business goes through distributors who are reasonably healthy. And to tell you the truth, our receivables, the AR is in good shape. It is in good shape in Q4 as compared to Q3. But if you ask me, in the channel, you ask me a question, how is the health of the channel? While Enphase manages the channel inventory closely, I mean, installers are having a difficult time. There is no question. There is no question that installers are having a difficult time. That is, cash flow to installers is always a problem, right? And now the business has moved predominantly from loan to lease. There are a lot of new players coming. There are established players, of course. So installers' robustness, cash flow is always an issue. And what is going to change that? Some of that is probably welcome for the industry because then it weeds out the weak players. The industry generally becomes stronger. What the industry needs in order to improve steadily in 2025 is improved quality, improved service, better and more stable financing options. They're all required. I won't sugarcoat it that everything is okay. It is a stress time. Bright spots are in California. Things have stabilized. I'll talk about the LA fires briefly as well. A lot of questions on whether the LA fires is causing a problem, causing a disruption. Of course, it is unfortunate, tragic. However, the LA fires probably caused a disruption for a couple of weeks, but now we find that the activity is back in full flow in that region. There were about 10-plus zip codes that were affected. Enphase homes in those regions, about 500 homes with Enphase solar and storage were damaged. But overall, those zip codes only had a couple of thousand homes. So limited exposure, and those are in the process of rebuilding. Installers had that problem. But in general, California has, I would say, bounced back from before. I don't find installers saying, "I don't know how to sell a NEM 3.0." On the contrary, they are getting more confident. They know how to sell a NEM 3.0. Outside California, it's still tough because the economics in many places aren't there due to low utility rates. The economics aren't, I mean, are weak. The East Coast is doing relatively well, again, due to high utility rates. Let me stop at that. All right. Thanks so much. And just as you transition to the IQ9 and change some of the componentry, can you talk a little bit about any sort of issues around tariffs and any sort of supply chain elements that you have to navigate here or at risk as you start looking at production of that new product? Yeah. Look, I mean, the phenomenal thing our team has done, our operations team has done, is we don't expect any impact on tariffs for microinverters because over time, we have diversified the supply chain so much. We are manufacturing now in the U.S. We are manufacturing in Chennai, India. So you could ask us saying, "How about the raw materials that come in from China into the U.S.?" I mean, we have reduced that exposure to very limited. So basically, there, we have diversified the entire supplier base that it is a non-issue. I expect it to be a non-issue for IQ9 as well. If your question is about GaN and GaN, the gallium supply chain, that's also a non-issue. Our suppliers, our predominant supplier that we will use is based in Europe. And another supplier based in North America as well as Japan. So our exposure is limited. And in fact, I would say we are not worried about it for IQ9. Our next question comes from Andrew Percoco from Morgan Stanley. Please go ahead with your question. Great. Thanks so much for taking the question. Maybe just switching gears a little bit, Dr. Badri, you sound pretty confident in terms of the outlook for the industry and your business overall. I'm just curious, just given your balance sheet position, given where the stock is, is there an opportunity to maybe lean into buybacks more heavily or capital return more heavily, just given maybe a dislocation in what you view the intrinsic value of the stock and where the stock's trading and just given the balance sheet and the outlook for the business that you've kind of portrayed over the balance of this call? Right. I've articulated our strategy there before. Let me tell you that again. We first, we take care of the needs of the business, number one. We ensure that all of the capital needs for the business are taken care of, whether if we want to buy something for manufacturing batteries in the U.S., manufacturing microinverters in the U.S., increasing capacity, diversifying with one more contract manufacturer, buying test capacity. All of those, that's our first choice, or buying new pieces of software to make the company run better. So that's our first priority. If we have enough leftover from there, we look for M&A opportunities, M&A opportunities that increase the total value of the company. What kind of opportunities are out there? New technology on batteries, new technology on home energy management, maybe looking more into the commercial front, small commercial, where I think we could use some. So we look at that, and many of them, I mean, over time, we become allergic to big acquisitions. We'd like to do small teams, bolt-on acquisitions is what we would like to do, and then once these two are taken care of, as long as the share price is below a conservatively estimated intrinsic value, then we buy stock. Last quarter, you'll be happy to note that we bought close to 2.8 million shares. We thought it's a good use. So we spent about $200 million in cash buyback. In the past, we had done up to $100 million per quarter. And so we plan to do that with the guidance from our board. We plan to have the same strategy. And if we believe the share prices are undervalued, which we think they are, and you can expect similar action from us going forward. Our next question comes from Christine Cho from Barclays. Please go ahead with your question. Good evening. Thank you for taking my question. You talk about piloting with the California utilities for the meter collar. I think I had heard that the back and forth between Tesla and the utilities had taken some time for their meter collar. Maybe it's just going to be longer because they were first. How long are you expecting your pilot to take? And then I'm sure you need their approval, but can you just walk through what other steps are needed before you can start selling them and the expected timeline? Sure. There is a prescribed timeline that is proposed by the Public Utilities Commission. Of course, I mean, I will not comment about anything that happened before. Our experience thus far has been generally very positive. They've been very engaged with us. You have to get through all your certification first. So first and foremost, you have to get through the primary UL certification, which we completed. That in and of itself is a pretty big deal. Once you're through that, they have additional tests that they want to do both at the meter collar level, which is the unit level, as well as the system level. And that's the process that we are in. There's a lot of discussion that happens with their engineering teams in order for us to explain to them how the device works, as well as how the entire system works. And then we go through systemic testing with them. Each utility is slightly different than the other. So we are working with all three of the IOUs simultaneously, and they're at different stages of testing. That's about what I can say thus far. But our experience has been thus far quite positive. Okay. Great. And then just moving on to the safe harbor, the $95 million that you mentioned, was that mostly in response to the domestic content updates that came out last month and the desire to safe harbor under the old DC table since you only have like 90 days to do that? Or was it driven by everything going from Section 48 to 48E or something else? So just any color there would be helpful. Yeah. I think it was mostly a risk mitigation strategy overall. It could include domestic. It could include ITC, etc. Our next question comes from Praneeth Satish from Wells Fargo. Please go ahead with your question. Thanks. Good evening. Just on the fourth-generation battery, I think you previously indicated that the pilot would start in Q4. Now it looks like it's starting in Q1 or March. I guess what drove that slight shift in timing? And then, how should we think about the timeline for ramping battery sales? I guess at what point do you think you could see the next-gen battery cross over 50% of your battery mix? Could that happen in Q2 or Q3 of this year? Yeah. I mean, we always told you the first quarter, so we are exactly there. We did not talk about Q4, so now the next question is, when do you think we will ramp and how much and when we will get to 50%? We expect, assuming the piloting goes well, and we expect to start ramping in Q2, and typically, in our experience, it takes a couple of quarters for us to ramp to the 50% level and maybe one quarter more to 80% level. That's been our experience. This is a new product, so there could be something more unique there, but this has been our experience. Okay. That's helpful. And then the timing between your battery generations, from what I can tell, kind of looking historically, it's been around three, four years. But now you're talking about a fifth-generation battery just one year after the fourth-generation launch. I guess what's driving this acceleration in your product development cycle? Are you seeing competitors iterate at the same speed? And if not, if you're releasing new generations of batteries faster than peers, then can we expect to see the gross margin just continue to climb, at least on the battery side, over the next two to three years? Yeah. I mean, just for reference, we released our third-generation battery in June of 2023. So we're talking about Q1, and that's approximately, let's say, 18 to 24 months. Just for users to recollect, we launched our first-generation battery, number one, in 2020. We started shipping in Q3 of 2020. Within about 18 months, we launched the second generation. And then, like what I said, the third generation in June of 2023. We have become better at doing these batteries. We have an expert team now, which understands how to do the ZIPE, both hardware, software, app. And there is a lot of complications. Sometimes we fall flat. Sometimes we miss our commitments, but we have generally gotten more confident. So our fifth-generation battery, the one I said is coming out in Q1 2026. That one we started working on over a year ago. It usually starts off in the CTO team. And then we do essentially technology feasibility. Then a small team starts off, and then we officially kick it off. So it's not new. There is always overlap, like what I said. We work on both N and N plus 1 at any point in time. So that's why we think we will get on. We will lock ourselves onto that timeframe, 12 to 18 months. You should expect from us a steady cadence of batteries coming up. Our next question comes from Mark Strouse from JPMorgan. Please go ahead with your question. Great. Thanks for taking our questions. Helpful call. I just have one quick question remaining. When you look at the safe harbor activity that's in the 1Q and 2Q guide this year, and maybe even kind of your safe harbor activity pre-IRA, is there anything to call out as far as both gross and operating margins? Should we assume that those kind of align with corporate average or anything that we should be adjusting for in our model? Thank you. No. You should just be assuming they are at our usual gross margins. Okay. Thank you. Our next question comes from Kashy Harrison from Piper Sandler. Please go ahead with your question. Good afternoon, and thanks for taking the questions. I just want to go back to the original questions earlier in the call just to make sure we're all on the 100% the same page. So you mentioned $95 million of safe harbor that you booked that in 4Q. You highlight $50 million in 1Q. So should we expect the rest of the 45 to roll over in 2Q, or are you saying that there's some other dynamic we need to be thinking about? No, you're right. It will roll over into Q2. Yeah, 2Q. Okay. Thank you. And then just one follow-up on the domestic content front. Can you speak to what you think the net cost of your system is now that you could theoretically qualify for both the solar and the storage side, and how that would compare to the net cost of, say, a Powerwall 3 theoretically that might qualify on the storage side but not the solar side? I'm trying to see if today, on a net basis, for backup, you would be cheaper because of the domestic content benefit, or you would still need the fourth gen to get to that point where you're cheaper. Thank you. No, we do qualify today. Our domestic content is well more than 40% on batteries today. So we do qualify already. We are making those batteries in Texas. We shipped 6.7 megawatt hours of batteries in Q4. We expect to ship a lot more in Q1. Our next question comes from Joseph Osha from Guggenheim. Please go ahead with your question. Thank you. Just one question from me as it relates to the return of capital. I'm curious if all of you have contemplated simply just making a commitment to repurchase a certain amount of stock per year, regardless of the level, as opposed to some of the timing activity you've been engaged in. Wouldn't that make more sense? No, I think I told you our strategy is very simple, very clear. First, take care of the needs of the business. Take care of M&As. And then if money is left, we look at buying at a conservative amount below the intrinsic value. And so. Okay. Perhaps I misspoke. Obviously, you need to take care of the business first. Yeah. I mean, we did that exactly. And if you saw, we did about $200 million of buyback in Q4. We've been very steady. In the past quarters in 2024, we did approximately up to 100 every quarter. And we plan to execute a similar strategy with the approval of our board in 2025. Okay. Thank you. Our next question comes from Maheep Mandloi from Mizuho. Please go ahead with your question. Hey, thanks for taking the question. Just on the safe harbor, it's hard to think about that. But do you know if the safe harbor is financed through third parties or directly through the companies? You know that. And secondly, just tell me when you can see European gross margins. It looks like European gross margins are slightly lower than Europe, but it's generally somewhat. We could not hear that question well, but if you're asking about customer details, we aren't going to be talking about customer details there. Got it. Now, the second part was just on the European gross margins versus the U.S. gross margins. Yeah. In the past, I've clarified it. The European gross margins are at similar levels as the U.S. gross margin. Our pricing strategy is the same. Our prices are also approximately the same list prices with distributors. So we don't see any difference. Our next question comes from Dylan Nassano from Wolfe Research. Please go ahead with your question. Yeah. Hi. Thanks for taking my question. Can you just talk a little bit about what kind of trends you might be seeing with market share across battery markets, solar-only markets, and then specifically within the TPO players? We don't really comment about market share. But in general, what we can say is that especially as you look at the Gen 4 product that's coming out, it's the Generation 4 product. It's not just the battery, to be very clear. It is the battery. It's the new combiner which has a whole host of new capabilities. It's got a substantial amount of integration that, as we talked about, that system controller that we had previously that was doing the actual what's called the microgrid interconnect device function. All of that has been significantly simplified. That is resulting in as much as $300 per kilowatt-hour reduction in cost for the installer. It's a combination of both savings in labor by going to the meter collar as well as the savings in the product cost as well. So just by moving to that new technology, you're seeing a substantial amount of savings. So what that allows us to do is be very competitive, not just in the grid-tied case, which we have always been, even with the third-generation system. Now we are very, very competitive even with the backup scenario while retaining all the benefits of the Enphase system, which is the reliability piece, the safety piece, the simplicity piece, and the performance piece. So I think the next-generation product is going to make a big difference in terms of how competitive we are even in the backup scenario. And there are a few third-party reports, if you're interested, that if you want to take a look at our share, I would refer to those. And there are multiple of them, and each of them having their own way of looking at it. So you should take a look at that. Great. Thank you. I'll take the rest offline. Thank you. Once again, if you would like to ask a question, please press Star and 1. To withdraw your questions, you may press Star and 2. We do ask that you please limit yourselves to a single question and a follow-up. Our next question comes from Gordon Johnson from GLJ Research. Please go ahead with your question. Hey, guys. Thanks for taking my question. A lot of them have been answered. But I'm just looking at some of the specific data for the California Solar Initiative. And it shows Tesla's Powerwall gaining significant share in the storage space, them also taking share in the inverter space. And I just wanted to know if you guys are still seeing those trends continue or you're taking share back from them. And then I have another question. Yeah. Like what I said, we don't comment on competition. We are focused on making best-in-class products. We had talked about our battery being very popular for grid-tied applications in California. With the fourth-generation product, we will not only be best-in-class for grid-tied, we will also be best-in-class for backup, and that has been one of our limitations till now, and we are going to unleash or unblock that limitation very, very soon, so we are excited there. Our battery is a modular battery. So you don't need to buy a 13 or a 26 kilowatt-hour. You can buy 15 kilowatt-hours. You can buy 20. So ours is a modular solution, and it will be very cost-effective. Now, coming on the micro side, I talked about it extensively in prior calls. The value proposition of our microinverters are superior power production shading. It compensates, meaning shading usually can cause a power production that is dramatically lesser. Microinverters optimize at the per-panel level and therefore able to really maximize the energy production. And then single point of failure, a 25-year warranty versus a 10-year warranty from competition. By the way, on batteries, we do 15-year warranty versus a 10-year warranty from competition. Serviceability is a big deal. When you have a monolithic structure in the battery and you have to replace your entire battery, that's tough to do that. It results in weeks and months of non-performance for the homeowner. Ours comes with serviceability. I'm proud to say 95% of the issues in our battery systems can be solved in situ. In situ means our field service goes, and he just replaces a $40 board instead of taking a $5,000 battery off the wall. And so we have numerous advantages in terms of modularity, simplicity, warranty, safety, and serviceability. And then the other two things which I talked about, which are not to be discounted, the ones we introduced in Q4, we introduced something called a Busbar PCS, Busbar Power Control Software. Busbar Power Control Software helps in eliminating main panel upgrades 95% of the time. And so our installers are very happy with that. They are starting to use that for every design. And it maximizes the ability, or it maximizes the size of the solar plus storage system. Similarly, one more thing that we introduced, another big deal, is, as users, they have higher consumption because they bought an EV or something. They want to expand their legacy systems. We basically provide them a very simple solution, once again, with Power Control Software. Our Enphase Power Control Software enables you to do NEM expansion without losing the benefits of your legacy system. So we introduced that also in the fourth quarter. So a lot of benefits working with Enphase. Most important, we will take care of our installers. And if there is any shortage, supply shortage, they can count on us to take care of them. Our next question comes from Austin Moeller from Canaccord. Please go ahead with your question. Hi. Good afternoon. So just my first question here. In Europe, the data that we've collected on electricity rate shows that key markets like France and Germany are still relatively stable. Where do you see electricity rates in Europe needing to go to catalyze a demand recovery there? Yeah. Maybe you should check your data. February 1st in France, electricity rates came down by 15% on February 1st. So that is going to create a headwind for some time. However, that market is a very attractive market, meaning only very limited solar penetration so far. Lots of EV penetration beginning to happen. Feed-in tariff in France is becoming lesser and lesser. So it's an opportunity for where we excel, which is solar plus batteries plus our EV chargers plus home energy management. In home energy management, hot water heaters are a big part of the equation. We are going to be introducing green heating option, which is when you have a small feed-in tariff, you don't want to export any solar back to the grid. You want to utilize every ounce of solar. And therefore, we divert, we steer the excess solar onto the hot water heater and increase the self-consumption. So we are working on introducing comprehensive home energy management solutions to every country across Europe because that's how we see the market evolution. Net metering, while everybody has enjoyed net metering for a while, the practical reality is it will go away sometime or the other. And we can come to the rescue, still save money for homeowners with solar, with battery, with EV chargers, with home energy management. And that's how I predict markets will evolve. It may not evolve in the immediate future, but that's where the trends are going. Great. And just to follow up, in line with your discussion of a shortage of power in the near term, do you think that there could be a demand for solar plus battery in states like Texas or Tennessee where they have an electricity cost of $0.15-$0.14 per kilowatt-hour purely because there's a large number of data centers geolocated there? Of course. Right. As we have talked about this, the demand environment has not changed. Demand for energy has not changed. There is both front-of-the-meter demand due to data centers, but there is substantial demand behind the meter as well as people are electrifying with the combination of EV charger and heat pumps. When you mention a state like Texas, as well as for that matter, even in Europe, those are deregulated markets. One of the big advantages of a solar plus battery system or solar plus battery plus EV charger system is for these distributed energy resources to participate in markets. If you think about a day-ahead market, for example, if you have a really smart AI-based energy management system like what we do, we can be very intelligent about when to charge the battery, when to discharge the battery, when to charge your EV, when to buy from the grid, when to sell to the grid. We can generate a substantial amount of savings as well as in some cases revenue for the homeowner. So you're seeing that as a pretty significant play in a number of countries in Europe as well as in places like Texas. Excellent. Thanks for all the details. And our next question comes from Jeff Osborne from TD Cowen. Please go ahead with your question. Yeah. Thank you. Just two quick ones, Badri. I was wondering. I think in Q4, there was 1.7 million microinverters that received a 45X credit. And then you guided to 1.2, but the safe harbor is ramping in Q1. So did you get paid on production and then not on sell-through? I'm just trying to understand what's going on with the manufacturing credit in particular and the seasonality between Q4 and Q1. Yeah. I mean, look, our folks are usually a little conservative when we give you this. Also, the necessity to balance manufacturing across worldwide comes into play. When we say 1.2, we mean 1.2 is from the U.S. facility. That means the balance is covered by elsewhere, such as India. Of course, there is a desire to maximize profit dollars, but we have to be cautious because we need to be running balanced global manufacturing. That's why. Is there any downtime in Q1 or anything? Or I'd imagine that would ramp up through the year. No? No. I mean, that number will fluctuate depending on how we are able to load and how we are able to provide best-in-class service to customers. For example, sometimes we find that for short lead time orders, making it in our India factory and shipping it to Europe provides best results. And we just cannot idle factories and expect them to start back up later. So best practice is that. You should view Q4 as a little more upside, and then you should view Q1 as conservative. Got it. And the last question I had is I think Mandy mentioned $110 million of prepayments in Q4, but the safe harbor was for $95 million. What are the other types of products that you receive prepayments for? Well, in general, we do have customer prepayments depending on their credit terms. But however, in this case, there were some customers who did want to place small amounts of orders so that they can secure their capacity. And those we view as run rate business to be consumed in the next one to two quarters. So that makes up for the balance. So maybe the 15 million could be consumed in less than the eight quarters, but maybe some of your peers might categorize that as safe harbor or at least under the letter of the law given the cash changed hands prior to the end of the year is the right way to think about it? It's possible, and we expect not. I mean, we expect less than two quarters. Got it. Thank you. That's all I had. And ladies and gentlemen, at this time, we'll be ending today's question and answer session. I'd like to turn the floor back over to Badri Kothandaraman for any closing remarks. Thank you for joining us today and for your continued support of Enphase. We look forward to speaking with you again next quarter. Bye. And with that, ladies and gentlemen, we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your line.