Good day and welcome to Enphase Energy's second quarter 2025 financial results 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 then one on a touchtone phone. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Zach Freedman. Please go ahead. Good afternoon and thank you for joining us on today's conference call to discuss Enphase Energy's second quarter 2025 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 Energy issued a press release announcing the results for its second quarter ended June 30, 2025. During this conference call, Enphase Energy 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, tax, tariff, and supply chain 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 second quarter 2025 financial results. We reported quarterly revenue of $363.2 million, shipped 1.53 million microinverters and 190.9 MWh of batteries, and generated free cash flow of $18.4 million. Our Q2 revenue included $40.4 million of safe harbor revenue. As we exited Q2, our battery channel inventory was normal while our microinverter channel inventory was slightly elevated. For the second quarter, we delivered 49% gross margin, 21% operating expenses, and 27% operating income, all as a percentage of revenue on a non-GAAP basis and including the net IRA benefit. Mandy will go into our financials later in the call. Our global customer service NPS was 79% in Q2 compared to 77% in Q1. The average call wait time decreased to 1.8 minutes, largely due to staffing and continued investment in automation. Let's cover operations. Our global capacity is around 7` million microinverters per quarter with 5 million in the U.S. In Q2, we shipped approximately 1.41 million microinverters from our U.S. contract manufacturers, booking 45x production tax credits. Our domestically produced microinverters help residential lease PPA providers and commercial asset owners to qualify for the 10% domestic content ITC adder. We expect to ship approximately 1.2 million microinverters from the U.S. in Q3. We grew our domestic battery production in Q2, shipping 46.9 MWh compared to 44.1 MWh in Q1. We are building the IQ Battery 5P in the U.S. using domestically manufactured microinverters, thermal and battery management systems, as well as packaging, while sourcing cell packs from China. These batteries with greater than 45% domestic content once again can help our lease and PPA customers qualify for ITC bonuses. We remain on track to have non-China cells by the end of this year. Scaling into battery builds during the first half of 2026, our U.S.-made batteries with non-China cells can help customers qualify for domestic content ITC bonuses and meet Foreign Entity of Concern or FEOC compliance as the criteria become increasingly stringent every year. Let's cover tariffs. In Q2, we absorbed a 2% gross margin impact due to tariffs. The originally proposed 145% tariff on Chinese products was ultimately reduced to 30% in May. As a result, our expected 6%- 8% margin headwind in Q3 has improved to an estimated 3%- 5% even after accounting for new tariff increases on several non-China countries which are going to be effective August 1st. This progress is a direct result of our team's relentless execution in diversifying our supply chain. We are not only mitigating tariff risks, we are future-proofing our operations and positioning Enphase Energy to lead under tightening FEOC compliance rules. Let's cover the regions. Our U.S. and international revenue mix for Q2 was 75% and 25% respectively. In the U.S., our revenue increased 3% in Q2 compared to Q1, primarily due to higher seasonal demand, partially offset by lower safe harbor revenue of $40.4 million compared to $54 million in Q1. The overall sell-through of our products was up 17% in Q2 as compared to Q1. Let me make some brief comments on the market. The U.S. solar market is showing signs of improvement with rising battery attach rates and seasonal demand contributing to increased momentum. While we haven't yet seen a material rush related to the expiring 25D homeowner tax credit, we expect urgency to build later in the year as more consumers move to secure the credit. As we head into 2026, the U.S. solar industry must evolve rapidly in response to the recent tax reconciliation bill. First, we expect an accelerated shift towards leases and PPA anchored by the 48E tax credit through 2027. Second, batteries will become central to every solar sale, propelled by declining installation costs, long-term tax credit support through 2033, and growing homeowner demand for energy resilience and participation in VPPs. Third, the industry must drive down customer acquisition and selling costs to remain competitive in a maturing market. We believe these structural shifts, coupled with the escalating utility rates and increasing grid instability, create a tailwind for sustained demand in residential solar plus storage. Enphase Energy is executing a multi-pronged strategy to lead the industry through these transitions. We are partnering closely with third-party owner, or TPO, providers to design innovative financing structures that maximize tax credit capture under the new rules. Our goal is to expand lease financing availability across a much wider installer base, including smaller and mid-sized players. By removing friction in financing and by broadening access, we aim to accelerate residential solar adoption and ensure that more homeowners can participate in the clean energy transition. Our battery technology roadmap has been advancing rapidly with a laser focus on driving down installation costs and unlocking scale. In June we began shipping our 4th-generation battery systems in the U.S., cutting backup costs by several thousand dollars. Our 5th-generation battery is already under development and is expected to deliver a 50% increase in energy density and a major cost reduction, pushing the boundaries of performance and affordability. When paired with our next-generation IQ9 microinverters, which are launching later this year, we expect to deliver one of the most compelling and integrated solar plus battery solutions in the industry, designed to meet the needs of both homeowners and installers at scale. Finally, we are doubling down on our installer services platform to aggressively reduce soft costs across the industry. With SolarGraph, our all-in-one design and proposal platform, Solar Lead Factory, our performance-driven lead generation engine, and Enphase Care, our 24x7 expert-backed homeowner support program, we offer a unique integrated toolkit to streamline operations, cut acquisition costs, and boost installer productivity. We believe these assets position Enphase not just as a technology provider but as a full-stack partner to help the industry scale more efficiently. We are executing with urgency and look forward to sharing the progress in quarters ahead. In Europe, our revenue increased 11% in Q2 compared to Q1, while our overall sell-through increased by 5%. The overall business environment across the region is still challenging, but we are maintaining our discipline on controlling the channel as well as expanding our served available market by introducing new products. I'll now provide some additional color on our key markets in Europe: the Netherlands, France, Germany, and UK. In the Netherlands, demand remains soft in Q2 as the market transitions from solar-only systems to integrated solar plus battery solutions. This shift is accelerating due to rising export penalties and the planned sunset of net metering at the end of 2026. We are uniquely positioned to lead in this evolving landscape with an installed base of approximately 500,000 residential solar systems. As net metering phases out in the Netherlands, we believe homeowners will increasingly turn to batteries not only to maximize self consumption and backup power, but also to participate in VPP programs that offer new value streams in retail energy markets. This transition can unlock a compelling $2 billion market and represents a strategic opportunity for us to deepen our utility partnerships, scale battery deployments, and drive growth across the region. In France, the market remained subdued in Q2 as expected, with the industry anticipating a significant reduction in VAT on solar systems which is set to take effect in October. This policy change is expected to reignite demand. Despite the current slowdown, France remains very critical for us. Driven by our strong brand, technology leadership, and the country's relatively low solar penetration, we are seeing a very meaningful uptick in battery demand spurred by low feed-in tariffs that make self consumption far more valuable. Our IQ Battery 5P with full backup capability has been well received by both homeowners and installers. In May, we introduced intelligent hot water heater steering to further boost self consumption and savings. This feature is expected to become a key driver in the French market, where heating water represents a substantial portion of household energy use. With these building blocks in place, we believe we are well positioned to capitalize on the next wave of growth in solar plus battery adoption in France. In Germany, we are ramping sales of our IQ Battery 5P with Flex Phase and IQ EV Charger 2, both of which are gaining strong momentum with homeowners seeking all-in-one solutions. We also launched our IQ Balcony Solar systems in Q2, unlocking a fast growing market segment for renters and apartment dwellers. These innovations, combined with our deep partnership with some of the top installers, are helping us return to growth and expand our presence in a strategically important market. The UK market continues to perform well for us as we strengthen our relationships with retail energy providers in the region, and our robust API platform is proving invaluable in supporting them. We are shipping our IQ EV Charger 2 into the market and plan to also introduce backup capability for our batteries in Q3 of this year, further expanding our energy resilience offering in the region. In Australia, momentum is building with the July 1st rebate from the government fueling strong interest in batteries. We are gearing up to launch our IQ Battery 5P with FlexPhase in the country, imminently delivering powerful 3-phase backup and flexible power in order to meet dynamic DSO requirements. Our IQ8P microinverters are also set to launch soon, supporting the latest high-power solar modules in both residential and commercial markets. We have also introduced our next-generation IQ EV Chargers, expanding our electrification offering to simplify retrofit installations. We are enabling compatibility between IQ7 and IQ8 microinverters on the same branch circuit, improving installer productivity and accelerating adoption. Let's turn to our Q3 guidance. We expect revenue to be in the range of $330 million- $370 million. We anticipate continued growth in the U.S. and seasonal softness in Europe. We are approximately 75% booked to the midpoint of our revenue guidance for IQ Batteries. We expect to ship between 190 MWh- 210 MWh during the quarter. We are actively engaged with several TPO partners who are awaiting further clarity on safe harbor rules following the recent executive order, and we remain well positioned to support them once they finalize their plans. Let's talk about new products starting with IQ Batteries. In June, we began shipping our 4th-generation battery systems to the U.S. The new battery delivers 30% more energy density, occupies 62% less wall space, and reduces installation cost. Our IQ Meter Collar simplifies whole home backup by integrating MID functionality, while the new combiner unifies the connection of solar, batteries, EV charging, and load control into a single enclosure. Together, these innovations simplify backup installation, improve reliability, and deliver superior homeowner value. The Meter Collar is now approved by 29 U.S. utilities and growing, and as I noted earlier, we believe our aggressive battery roadmap beyond the 4th- generation will continue to push boundaries on performance, integration, and cost. Our IQ Batteries are built for more than just backup; they are designed to earn with advanced APIs. Our batteries can seamlessly integrate into VPPs in regulated markets like the U.S. and participate in wholesale energy markets in deregulated regions such as Europe and Australia. Together, we are actively engaged in over 50 VPP programs worldwide with 210 MWh of Enphase batteries enrolled, unlocking new revenue streams for homeowners and accelerating the transition to a more flexible, resilient grid. Let's talk about microinverters. Our IQ8 microinverter family is now deployed in 58 countries and growing. Building on this global momentum, we are preparing to launch IQ9, our most advanced microinverter yet. Powered by cutting-edge gallium nitride technology, IQ9 is built for the future, supporting higher DC input currents, higher AC voltages, and three-phase compatibility with 427 W peak output. IQ9 is optimized for pairing with the most powerful residential and commercial panels on the market. Internal pilots are already running at Enphase Energy facilities, and we remain on track for full-scale production in Q4. We believe IQ9 marks a major leap in performance and platform flexibility and, importantly, unlocks a 2 GW market opportunity by enabling us to serve 480 volt 3- phase commercial systems in the U.S. for the first time. Our commercial IQ8P 3P microinverters are building momentum with over 850 commercial sites deployed across the U.S., averaging 35 kW per system and earning consistent positive feedback from the field. These 208 volt 3- phase microinverters now ship with U.S. domestic content, enabling the customers to benefit from the 10% ITC bonus, a significant edge for commercial asset owners. Both IQ8P 3P and IQ9 microinverters are expected to meet FEOC compliance, offering a powerful alternative in a market still dominated by Chinese equipment. The timing of the IQ9 launch is strategic, delivering a high-quality, reliable, and policy-aligned solution as the industry pivots towards a domestically compliant infrastructure. Let me come to Balcony Solar. Our IQ Balcony Solar product is now shipping into Germany and Belgium, with additional launches planned across Europe, Japan, India, and Utah in the next few quarters. Built on Enphase Energy's AC architecture, it enables homeowners to plug in anywhere between one and four panels directly into a standard wall outlet. No permits, no rewiring, and no complexity. A standout feature is Sunlight Backup, which allows critical appliances to stay powered during daytime outages even without a battery. An industry first that sets us apart on the portable power front. The IQ PowerPack 1500 marks our entry into the direct-to-consumer energy frontier. We expect to significantly scale e-commerce sales as the category opens a new channel for customer engagement and brand growth. In parallel, we plan to expand the IQ PowerPack family into new regions including Europe, India, and Japan while broadening use cases to address a wide spectrum of mobile energy needs. Let's talk about EV charging. We are now shipping our next- generation IQ EV Charger 2 into 18 countries across Europe as well as Australia and New Zealand. This charger is designed to integrate seamlessly with Enphase solar and battery systems while also performing as a high-quality standalone solution. We recently earned EV Ready certification in France, one of the country's most rigorous standards, demonstrating our commitment to safety and performance. Over the coming months, we plan to expand availability into more European countries as well as Brazil, India, and introducing it back in the U.S., supporting the global shift to electrification with a trusted, proven solution. Let me now share an update on our IQ bidirectional EV charger, which is expected to launch in the middle of 2026. This 11 kW solution is powered by three high-performance microinverters built on a full gallium nitride architecture, delivering exceptional efficiency and compact design. Paired with the IQ Meter Collar in the U.S., it enables seamless vehicle-to-home and vehicle-to-grid functionality with automatic black start. Together, they offer one of the lowest cost and simplest ways to provide whole home backup, even without solar or stationary batteries. Homeowners can just charge with an EV, our bidirectional charger, and the Meter Collar, and then later can add solar or Enphase batteries depending on their preferences and energy goals. Built to ISO15118-20 standard and currently undergoing testing with multiple global OEMs, we believe this platform has the potential to redefine energy resilience by turning the EV into a flexible, grid-aware energy asset for the home. Let's talk about SolarGraph, our all-in-one platform purpose-built for installers. We are rolling out major enhancements, including seamless integration with our top TPO partners, powerful custom tariff builder, advanced dealer management tools, and a dramatically simplified AI-driven design experience. Every upgrade is designed to make SolarGraph more intuitive, intelligent, and more indispensable. As it continues to evolve, SolarGraph is becoming a strategic growth engine for us, empowering installers to sell faster, design smarter, and scale with confidence. The signing of the tax reconciliation bill marks a turning point for the U.S. solar industry, but adapting to change is core to Enphase's DNA. Over the past several years, we have evolved from a single microinverter product company into a global energy technology leader. Today, we offer a full portfolio of microinverters, batteries, EV chargers, and intelligent home energy management software. Our systems are deployed in more than 160 countries with over 4.9 million Enphase-powered homes worldwide. We are entering new consumer markets with products like Balcony Solar and portable energy systems. With our upcoming IQ9 microinverters, we expect to unlock the 480 volt commercial solar market in the U.S., which is a major expansion of our addressable market and a key step into larger scale energy applications. We believe we are strongly positioned to lead through the next phase of industry transformation. Our product roadmap is accelerating with next- generation microinverters and batteries, focusing on lowering installation costs and simplifying installations. We are doubling down on our installer services platform to help drive soft costs and expand lease financing access across the industry. The long-term fundamentals for distributed energy remain powerful: rising demand, higher utility rates, and growing homeowner interest in resilience and energy independence. As the market shifts, we will keep doing what we do best, innovating with purpose, moving fast, and staying relentlessly focused on our customers. With that, I will turn 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 second quarter of 2025 financial results as well as our business outlook for the third quarter of 2025. We have provided reconciliations of these non-GAAP to GAAP financial measures in our earnings release posted today, which can also be found in the IR section of our website. Total revenue for Q2 was $363.2 million. We shipped approximately 675.4 MW CCO microinverters and 190.9 MWh of IQ batteries in the quarter. Q2 revenue included $40.4 million of safe harbor revenue. As a reminder, we define safe harbor revenue as any sales made to customers who claim to install the inventory over more than a year. Non-GAAP gross margin for Q2 was 48.6% compared to 48.9% in Q1. GAAP gross margin was 46.9% for Q2 compared to 47.2% in Q1. Non-GAAP gross margin without net IRA benefit for Q2 was 37.2% compared to 38.3% in Q1. Reciprocal tariffs impacted our gross margins by approximately 2% in Q2 GAAP and non-GAAP. Gross margin for Q2 also included $41.5 million of net IRA benefit. Non-GAAP operating expenses were $77.8 million for Q2 compared to $79.4 million for Q1. GAAP operating expenses were $133.5 million for Q2 compared to $136.3 million for Q1. GAAP operating expenses for Q2 included $49.5 million of stock-based compensation expenses, $2.9 million of amortization for acquired intangible assets, and $3.3 million of restructuring asset impairment charges. On a non-GAAP basis, income from operations for Q2 was $98.6 million compared to $94.6 million for Q1. On a GAAP basis, income from operations was $37 million for Q2 compared to $31.9 million for Q1. On a non-GAAP basis, net income for Q2 was $89.9 million compared to $89.2 million for Q1. This resulted in non-GAAP diluted earnings per share of $0.69 for Q2 compared to $0.68 for Q1. GAAP net income for Q2 was $37.1 million compared to $29.7 million for Q1. This resulted in GAAP diluted earnings per share of $0.28 for Q2 compared to $0.22 for Q1. We assessed that Q2 with the total cash, cash equivalents and marketable securities balance of $1.53 billion, flat when compared to Q1. As part of our $1 billion share repurchase program authorized by our Board of Directors in July 2023, we repurchased 702,948 shares of our common stock in Q2 at an average price of $42.67 per share for a total of approximately $30 million. We have a remaining $268.7 million authorized for further share repurchases. In addition, we spent approximately $3 million by withholding shares to cover taxes for employees' start vesting in Q2 that reduced the diluted shares by 58,332 shares. We expect to continue this anti-dilution plan in Q2. We generated $26.6 million in cash flow from operations and $18.4 million in free cash flow. Capital expenditure was $8.2 million for Q2 compared to $14.6 million for Q1. Now let's discuss our outlook for the third quarter of 2025. We expect our revenue for Q3 to be within a range of $330 million- $370 million, which includes shipments of 190 MWh- 210 MWh of IQ batteries. We expect GAAP gross margin to be within a range of 41%- 44%, including approximately three to five percentage points of reciprocal tariff impact. We expect non-GAAP gross margin to be within a range of 43% - 46% with net IRA benefit and 33%- 36% before net IRA benefit, including the reciprocal tariff impact. Non-GAAP gross margin excludes stock-based compensation expense and acquisition-related amortization. We expect the net IRA benefit to be between $34 and $38 million, and estimated shipment of 1.2 million units of U.S.-made microinverters in Q3. We expect our GAAP operating expenses to be within the range of $130million- $134 million, including approximately $52 million estimated for stock-based compensation expenses, acquisition-related amortization, and restructuring and asset impairment charges. We expect our non-GAAP operating expenses to be within the range of $78 million- $82 million for the year 2025. We expect our GAAP tax rate of 19% - 21% and a non-GAAP tax rate of 15%- 17% including IRA benefits. With that, I will open the line for questions. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Your first question today will come from Praneeth Satish with Wells Fargo. Please go ahead. Thanks. Good afternoon Badri, I think you mentioned in your remarks partnering with TPO providers and introducing some creative financing structures that could help maximize the tax credit capture. Can you just elaborate on what those type of structures could look like and when you plan to launch that? I guess is the goal here to kind of take your relationships with the long tail installers and get them onto a TPO platform and then maybe just to follow up on that, just to level set, what is your market share with TPO providers today after the recent bankruptcies in the space? I guess how do you expect that to evolve in 2026? I'll start with the second question first. First of all, our overall market share in the U.S. is quite healthy, as you all know, and it is available in public analytic reports. We have a healthy share for both cash loan customers as well as healthy share with the TPO customers. We have not broken it out and we do have healthy share. We work with every one of these TPO customers. We work with every single one. Right now we are in deep discussions with them because what we have is we know how to service Long Tail installers, we have the relationships with the Long Tail installers. If we can bring lease financing access to the Long Tail, we can prevent a market erosion, overall market erosion. That is what we are aiming to do. We are working with a lot of the TPOs. We aren't ready to share more details yet, but we will share those very soon, perhaps in the next earnings call, and we are looking to move on it aggressively. Let me leave it at that. I'll add a couple more things. I've seen many of the analyst reports. They all say the U.S. TAM is about 4.5 GW for solar in 2025. I think it's approximately a couple of gigawatt hours for batteries in 2025. What is the view for it to be in 2026? There are various numbers. My personal view is that we expect a 20% drop in TAM in 2026 due to 25D. There are three things which we believe we need to do in order to mitigate the market reduction. One is what we just talked about, bringing lease financing to the Long Tail, how to facilitate that most effectively with a strong PPA partnership. The second one, working on driving down installation costs. There we talked about batteries. We just released our 4th- generation batteries. Batteries in general are ramping up in the U.S., they are getting more cost effective. I just told you that I am working on my 5th- generation batteries scheduled to come out in exactly a year from now. In that 5th- generation battery we are able to improve the energy density by more than 50% and we therefore can make a major improvement in cost and hence installation costs. Also, IQ9 has got a lot of innovation on it with gallium nitride in order to reduce the overall cost. We are looking forward to basically introducing world class products which have very efficient footprint and which will bring down the end installation costs. The third one is an interesting one, lead generation. The customer acquisition cost is very high in the solar industry and of the order of anywhere between $0.70 a W to $1.00 a W, and Enphase Energy needs to do a lot more in order to reduce that. I think we are taking up that once again. We are launching aggressive initiatives where we will be able to generate leads and pass on to our installers. Also note that we have a fleet that is 5 million homes. Earlier, in the past, installers may not have had time to focus on the upgrade market. Now it is going to be lucrative for them to focus on that market too. Three things which we are going to do well under our control while working with our partners is bring lease financing to the Long Tail, make world-class products driving down installation costs, and help reduce lead generation costs across the industry. Got it. It's very helpful. Maybe kind of switching gears. You mentioned that the micro channel is slightly elevated. We know demand is going to decline in 2026 once the 25D credit expires, I guess. How do you intend on managing field inventories with distributors for the balance of the year? Do you plan to under ship micros in either Q3 or Q4 to help reduce inventories, or do you think inventories could just get right sized more organically if we see maybe a pull forward of demand or some safe harbors in the second half? I think you answered the question yourself. Basically, this is exactly what we expect. We expect 25D increase in demand, which will come from the channel and make the channel at reasonable levels by the end of the year. Thank you. Your next question today will come from Philip Shen with ROTH Capital. Please go ahead. Hey, thanks for taking my questions in. terms of the Q3 guide, sorry if I missed it, but did you share how much safe harbor you expect in the Q3 revenue? You talked about not yet. Seeing the pull forward of demand, yet how do you expect that to manifest? Would it be more of a Q4 element, or do you think there could be an upside surprise to Q3? In terms of the elevated channel, how did we get to elevated channel levels? Was there a pause earlier in the year, or did you over ship into the channel? What are the levels historically? When you got right size recently, you were at eight- ten weeks. Are we talking about twelve weeks now or something higher? Thanks. Right. First of all, the Q3 revenue guidance does not include any safe harbor. As I said, we are working with several TPO partners and they are all looking at the recent executive order and waiting for further clarity. Once they have that clarity, they will take the actions. From our side, what we are doing is to ensure that we are ready in terms of capacity. Anytime that they want the product, we are going to be ready in order to service them. On your 25D question, I think we will see the 25D demand possibly in early Q4. That is what we will start seeing. Right now, we aren't seeing it, but we still have August and September left. That is what I expect, that we will start seeing it soon. I'm sure that installers, some installers, will have to make workforce changes. They may have to add temporary teams in order to feed the rush and those all take a little bit of time. I'm sure it's coming in Q4. The question on channel, we are completely transparent to you. We are actually in very good shape in channel management. Our experience in the last two years on the quantity of under-shipment, etc., that we had, we have recognized that's an anomaly and we will never get to that stage. Whenever I say slightly above, it should mean slightly above 8- 10. That's what it means. Okay, thanks, Badri. My follow up question is on something you said earlier. You said your assumption for 2026 is a TAM that's 20% lower. Can you walk us through the assumptions. Of how you get to the 20%. The baseline for loan versus TPO versus cash, et cetera, and then separately if you can. I know you won't guide to Q4 and Q1, but how are you thinking about Q4 and Q1 from a cadence standpoint if you are able to share? Thank you. Yeah, we expect approximately a 20% reduction in TAM. The way I'm thinking about it, just to tell you, simple, straightforward is let. Us say. The 4.5 has got 2 GW of lease and 2.5 GW of cash and loan. I expect basically the leasing market to be increasing a little bit and the cash and loan market to decrease by a lot. The end picture will, in our opinion, the end picture may look like 2.5 GW lease and 1 GW cash and loan in 2026. Of course, everybody's estimate is different. Our rationale is the following. The key markets in the U.S. are basically, you take a look at California. You take a look at California. The utility prices are high in California. Payback today is six- eight years in 2025, and with ITC not being there for a cash loan purchase or cash purchase, I should say the payback is going to stretch by 2 years. 6- 8 will become something like an 8- 10. Still very attractive economics. With the 25 year product we see the same economics, similar economics even in the East Coast where the utility rates are high. In the East Coast, VPPs are popular. Puerto Rico, for example, most of the business gets transacted on lease. We see that market to be remaining intact. The markets that probably will be hit hard are the Midwest, Central, and even Southeast where the utility rates are in general on the lower side. That's the big picture. Four and a half GW in 2025, we think it will go down to 3.5 GW in 2026. The lease market will slightly expand 2- 2.5. The cash and loan will go from 2.5- 1. That's the math and that's my opinion. It's not a fact. Again, if you would like to ask a question, please press star and then one. Please limit yourself to one question and one follow-up, and the next question will come from Brian Lee with Goldman Sachs. Please go ahead. Hey guys, good afternoon. Thanks for taking the questions. I guess, Badri, just following up on your strategic initiatives in a declining TAM environment. I appreciate you guys have an action plan already sort of in place. When you talk about working with the long tail on TPO and financing and then the lead gen, can you maybe give us a sense how quickly you can implement those strategies and then how much incremental cost you would have to incur? I would imagine maybe the OpEx has some incremental cost or some investment required to be able to start driving those two initiatives. My follow-up would just be in this environment where you just outlined a potential 20% reduction in volume, you're looking at ways to maintain as much of that volume as possible. Would pricing actions to mitigate some of that TAM loss and capture more volume be part of the strategy? Maybe walk us through what you're thinking around pricing in that type of environment as well. Thank you. Yeah. In terms of operating expenses, we don't anticipate any major change because what we are really doing will be ultimately lucrative for the TPOs. It is. We are essentially making sure that that demand is not lost. The long tail has got access, so the TPOs should have more business. You know, the operating costs for us in order to facilitate this is not meaningfully higher. In terms of pricing actions, you know what I have told you is the following. The way we are going on batteries, for example, we are going to have, we already reduced the installation cost, for example with the 4th- generation product. Now we are taking that and cutting it down by another big factor, basically increasing the energy density. We are going to prismatic cells. Once we do that, what happens is our margins fundamentally improve. Similarly, on IQ9, when we go to the bi-directional GaN switch, what happens is once we start running GaN at an increased frequency, then what happens is we are able to optimize the rest of the bill of materials. Ultimately, we are able to produce 10% power, maybe even 20% power at a similar cost structure as before. Innovation is the answer. Innovation is the answer. We are innovating on batteries. We are innovating on IQ9. As I said, we are also going to get, for the first time, we are going to introduce a three-phase 480 volt product. So. That's so coming back to pricing. Once we have fundamentally altered the cost structure, the pricing action is simple. It allows us room to do the correct pricing for the consumer depending on the value that we add. Your next question today will come from Julien Dumoulin-Smith with Jefferies. Please go ahead. Hi, this is Dushyant here for Julien. Thanks for taking my questions. Maybe the first one, could you discuss how the dynamics will work for the 4Q safe harboring? As we understand it, the system needs to be installed by year end too. Get the credit right. Will we see loan originations in 4Q given that uncertainty on timing of install? No, I think safe harbor. Basically, the rules are that the TPO partners, and I'm speaking for them, the TPO partners have approximately a year until June 30th, 2025, in order to finalize their safe harbor inventory and strategy. I guess you're talking about the 25D. The 25D? Yes. Correct. You're talking about 25D is where expenditure means it is both the customer has to pay, the consumer has to pay for it, as the system should be installed by the year end. Yes. In that instance, do you think we will see, because I know that you haven't seen installs yet. Or you. Haven't seen that demand pull in yet in 3Q, so unless you expect to see that in 4Q, do you think that will actually happen? There might be some uncertainty on loan originations. Right. Our opinion is it will happen. Our installers are experts, they know what to do. I think right now they need to make sure they expand their crews so that they start to cater to the demand rush. They have a lot of experience, and they can get solar installations done quickly. I do expect it to happen. Your next question of the day will come from Colin Rusch with Oppenheimer. Please go ahead. Thanks guys. Can you talk about your ability to upsell existing homeowners on either chargers or batteries, and what those unit economics look like as a combined sale, and your access to those customers through your partners? Can you go direct to those folks? Hey Colin, this is Raghu. Yeah, as Badri mentioned, that is a very important segment of the market that we are looking at. Of course, the customer acquisition cost is significantly lower because it's already an existing customer. I think from a product point of view there is a fundamental advantage. We are AC coupled. What that means is that we don't have to touch the existing solar system. You can come in and add a battery, you can come in and add an EV charger, and if you need to, which is very likely going to be the case, you may need to expand your solar system as well, which is also very simple with an AC coupled solution. Intrinsically, it has significant advantages both for customer acquisition as well as from a product point of view. There's no rip and replace, you don't have to pull out any inverters, etc. You just leave them alone and you can come in and add the solution. Just by simply adding the battery, if there's an existing, if there's a VPP program that you want to participate in, the battery can get enrolled in that VPP program as well. We see a lot of advantages. That market for us is very large. We have an installed base worldwide for about 4.9 million homes and the majority of them are here in the U.S. It is a very important market segment that we are going after. My follow up is on the non-EU, non-U.S. markets. Obviously you've had some success in Latin America, Australia, and other places. Can you talk a little bit about what growth looks like outside of those two main markets and how we should think about that as a contributor to the balance of this year and into next year? In terms of Australia, for example, Australia. Was. Flat in growth, I mean flat to down in growth in the last year or so and even for the first six months of this year. What happened is the new government came and introduced a battery rebate. Because it is a very lucrative battery rebate, the battery attach rate, everybody believes the battery attach rate is going to go up from like 30% to like 80% or 90%. That's a huge opportunity for us. We are already seeing that in installations happening and we are introducing a few products for them. For example, Australia needs three- phase backup and we are going to be introducing our FlexP hase battery imminently, any day now in Australia. In addition, we are also introducing our high powered microinverters to capitalize on commercial opportunities. In fact, Australia is getting an entire facelift of products. All of them will be available in Australia in the next couple of months. We expect Australia to resume growth starting from Q3. India. I haven't talked about it too much but in India what we are doing is now we have an IQ8 full IQ8P system which is very cost effective for the high panel wattages that are available. In addition, we have the battery and in India you lose power, for example, five times a day in India. Resilience is top of mind for them. Having said that, these batteries are what we cater to is the premium clientele, for example, premium villas. Those will have both IQ microinverters plus IQ Battery, beautiful system. It's compatible to three- phase and gives you complete energy independence. We are seeing India growth steady. It's not a hockey stick but every quarter it's higher than the previous quarter. The next one I'll talk about is Japan. We introduced a product for Japan very recently in the middle of Q2, just a few months ago. In fact, last week there was a roundtable. I met with all the Japan installers. As you know, Japan takes a little bit of time to ramp up, but once it is there it's a big opportunity for us. Japan is something we are very excited about. We expect to incrementally go there. We are already going to introduce new products there. The Balcony Solar product with the small systems gateway is going to be ideal for Japan. We will be introducing batteries into Japan next year. We got a nice roadmap for Japan right now. They have microinverters and we are figuring out how to ramp those along with our installers. That's what we're doing. Your next question today will come from Maheep Mandloi with Mizuho. Please go ahead. Hey, thanks for taking the questions. First one, just on the tariff impact, could you quantify the tariff impact on the Q3 earnings guidance and can I follow up on that on the Section 232 for the silicon investigation. It looks like there could be tariffs on silicon carbide, which I think is like 5% of the cost structures. Any thoughts on what tariffs could be expected on silicon carbide? And is IQ9 the way to kind of offset that or something else you have on that as well? Thanks. Just to answer that question first, we don't use silicon carbide. That does not affect us. The other question you asked is the tariff. Let me give you a full download on that. We had the 145% China tariffs in the last earnings call. At that time we projected an impact of 6%- 8% in the gross margin. Subsequently in May the 145% dropped to 30%. However, now effective August 1st, there are reciprocal tariffs with a lot of countries. For example, Malaysia is 25%, Vietnam is 20%. Basically there is no safe haven to call it. Wherever we are we got some kind of a tariff. Right now, when we said 3%- 5%. Let me take the midpoint. 4% is our gross margin impact due to tariff. If I take that as a given, that 4% if you break down 1% is from microinverters, 3% is from batteries. That 1% microinverters tells you that we have been working on this problem for a long time on microinverters a couple of years ago. We already diversified our supply chain in microinverters and we can adjust. Yet there is still going to be a small component of the tariffs, but that impact is only 1%. On the battery side, we obviously have the impact on the cells. The only way we can avoid that is by making the cells. For example, in the U.S. but the labor cost in the U.S. being high, the cost is awash between the two. How do we get back? How do we get that 4%? How do we make that a very small number? That doesn't matter. The way we will do that is with our 5th- generation battery which is fundamentally going to alter our gross margin structure. Essentially our gross margins will be a step change better than the third or 4th- generation battery. The way we should think about it as the tariffs right now is 4%. It might get a little smaller as you hit Q1 and Q2. 4 might become 3ish and then would go away once we launch the 5th- generation battery. Your next question today will come from Eric Stine with Craig Hallum. Please go ahead. Hey, thanks for sneaking me in here at the end. Just curious. You mentioned that some of the TPO is waiting on guidance and set to figure out their safe harbor plans. Any thoughts on when the Treasury might issue that guidance? I've seen a number of potential dates and it seems that no one really knows. I would love your opinion of when that might be. We are in the same boat as you. We do not know when the Treasury is going to release their guidance, and our TPO partners are a lot more experts at this. They are looking at it every day, and their plans unfortunately are changing too. Right now it is wait and. See. To look for the nuances of the guidance from Treasury and then execute on the safe harbor. Okay, I'll jump back into line. Thanks. Your next question today will come from Dylan Nassano with Wolfe Research. Please go ahead. Hey, good afternoon, everyone. I just wanted to follow up. See if there's any additional kind of demographic information you could share about the TPO providers that you're currently in discussions with. Are these like large existing players? Where do they sit geographically? As a follow up, have you identified any potential obstacles when it comes to helping the long tail shift to the leases? Just thinking about whether there are any customers saying they'd rather try to sell cash only systems without the credits instead of maybe adding the complexity of offering leases. Thank you. Yeah, we work with every TPO and we are having conversations with almost 80% of them right now on safe harbor. Your second question, can you repeat your second question? Sorry. Just in terms of what your customers are saying, are there any that are kind of indicating they'd rather just try to sell cash systems without credits? Of course. Of course, there are a lot of them who think that, you know, for example, in California especially, let me take actually San Diego. San Diego has got a six year payback today with solar plus batteries, and that might go to eight year payback. Some of our installers, I mean, we are having installer roundtables every week, and every week is from a different region to exactly ask the same question. How are you managing this transition? Some of them are absolutely confident of selling cash and loans still, some of them are pivoting towards lease and PPA. The answer is mixed. Your next question today will come from Mark Strouse with JPMorgan. Please go ahead. Great. Good afternoon. Thanks for taking questions. At this point, I'll just stick with one. A clarifying question on an earlier topic on helping your tail customers get financing. I understand you're going to give us more details sometime soon, but is using your own balance sheet part of that potential scenarios that you're looking at, or is it really just kind of data and partnerships and that kind of thing? Just curious about if you're looking to lever your balance sheet at all. Yeah, you know, we are not looking. At. Doing anything with the balance sheet, but if that changes, we'll let you know. However, what's important is we have a history of all of these installers. We know exactly how much volume they did. We know exactly their customer service, NPS, Net Promoter Score. We know everything about the installers. We know what drives them. We work very closely with them. When it comes to vetting things, we are in an ideal position to do so. Of course, since we designed the products, we also can do the service. For example, the service and maintenance is easy. Most of the problems can be solved remotely, 90% of the problems. We have our data analytics team which can solve those problems. Let me leave it at that. Okay, thank you. Your next question today will come from David Arcaro with Morgan Stanley. Please go ahead. Hey, thanks so much for taking my question here. I was just wondering if. You might be able to elaborate as you look into 2026. You talked about a bunch of, you know, product innovation efforts to lower cost. I was wondering if there are any other kind of internal cost reduction efforts, you know, potentially efforts to lower overhead, you know, OpEx, for example. Anything you're exploring there. Thanks. Absolutely. I mean, look, the market has had a demand problem over the last couple of years. Over the last couple of years where our demand has dropped, we have continuously adjusted our expenses without compromising on R&D or customer service. We will always be doing that. For us, it is a process, not an event. We think about expenses as not only labor. We have to think about expenses as labor plus non-labor. For example, we ask the question, do we need this software tool? Can we eliminate the software tool and do something else which is more intelligent? We ask those questions all the time. In light of any reduced demand, which we are trying to mitigate, if we are not able to mitigate the demand drop, we will continuously adjust our expenses. If you have a question, please press star and then one. Your next question today will come from Nicole Gosse with Bank of America. Please go ahead, Nicole. Your line may be muted. Your next question today will come from Chris Dendrinos with RBC Capital Markets. Please go ahead. Yeah, thank you for taking the question. I wanted to go back to some. Of the comments on the strategy, there's been a big focus here on marketing to the long tail. You've mentioned getting lease financing to them, improving lead generation. I guess, you know, there's an argument that with the adoption of TPO. Maybe there's additional consolidation in the industry. Maybe focusing on the other. End, maybe the fat part of. Of the tail here, you know. Is there any changes or anything you're doing in strategy to maybe expand your share with some of the bigger TPO providers, and how are you, I guess, maybe looking at those relationships, and is there anything you can do to improve those relationships? Thanks. Absolutely. I mean, there is a myth that we don't work with the TPOs. That's totally wrong. We work with every TPO. We look for opportunities to make them successful. What does that mean? It is basically total installation cost, total installation time, O&M, meaning taking care of servicing. So. We work with every one of those TPOs on these issues. For example, the 4th- generation battery and with the meter collar, our cost for backup is similar, meaning only slightly higher than the cost for no backup or grid tied options. What I'm trying to tell you is that the products that we do, we collaborate closely with the TPOs. We collaborate closely with them on service opportunities. And. Since we work with every one of them, we have deep partnerships there, and we'll be working on it even more aggressively in order to gain more market share. That's it for me. Thanks again. If you have a question, please press star and then one. Please stand by as we poll for questions. Seeing no further questions, this will conclude our question and answer session. I would like to turn the conference back over to Badri Kothandaraman for any closing remarks. Thanks for joining us today and for your continued support of Enphase Energy. We look forward to speaking with you again next quarter. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.