0001463101false2021December 31Q1911110.00351040.00325230.01226370.04877810.1800180us-gaap:AccruedLiabilitiesCurrentus-gaap:AccruedLiabilitiesCurrentus-gaap:OtherLiabilitiesNoncurrentus-gaap:OtherLiabilitiesNoncurrent00014631012021-01-012021-03-31xbrli:shares00014631012021-04-23iso4217:USD00014631012021-03-3100014631012020-12-31iso4217:USDxbrli:shares00014631012020-01-012020-03-310001463101us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-12-310001463101us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2019-12-310001463101us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-01-012021-03-310001463101us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-01-012020-03-310001463101us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-03-310001463101us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-03-310001463101us-gaap:RetainedEarningsMember2020-12-310001463101us-gaap:RetainedEarningsMember2019-12-310001463101us-gaap:RetainedEarningsMember2021-01-012021-03-310001463101us-gaap:RetainedEarningsMember2020-01-012020-03-310001463101us-gaap:RetainedEarningsMember2021-03-310001463101us-gaap:RetainedEarningsMember2020-03-310001463101us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001463101us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001463101us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001463101us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001463101us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001463101us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-3100014631012020-03-3100014631012019-12-310001463101country:US2021-01-012021-03-310001463101country:US2020-01-012020-03-310001463101enph:InternationalMember2021-01-012021-03-310001463101enph:InternationalMember2020-01-012020-03-310001463101us-gaap:TransferredAtPointInTimeMember2021-01-012021-03-310001463101us-gaap:TransferredAtPointInTimeMember2020-01-012020-03-310001463101us-gaap:TransferredOverTimeMember2021-01-012021-03-310001463101us-gaap:TransferredOverTimeMember2020-01-012020-03-3100014631012021-04-012021-03-3100014631012022-01-012021-03-3100014631012023-01-012021-03-3100014631012024-01-012021-03-3100014631012025-01-012021-03-3100014631012026-01-012021-03-31xbrli:pure0001463101enph:SofdeskIncMember2021-01-250001463101enph:SofdeskIncMember2021-01-252021-01-250001463101us-gaap:DevelopedTechnologyRightsMemberenph:SofdeskIncMember2021-01-250001463101us-gaap:DevelopedTechnologyRightsMemberenph:SofdeskIncMember2021-01-252021-01-250001463101us-gaap:CustomerRelationshipsMemberenph:SofdeskIncMember2021-01-250001463101us-gaap:CustomerRelationshipsMemberenph:SofdeskIncMember2021-01-252021-01-250001463101us-gaap:TradeNamesMemberenph:SofdeskIncMember2021-01-250001463101us-gaap:TradeNamesMemberenph:SofdeskIncMember2021-01-252021-01-250001463101enph:SofdeskIncMember2021-03-310001463101enph:DINsSolarDesignServicesDivisionMember2021-03-312021-03-310001463101enph:DINsSolarDesignServicesDivisionMemberenph:AdditionalConsiderationEqualMonthlyInstallmentsMember2021-03-310001463101enph:DINsSolarDesignServicesDivisionMemberenph:AdditionalConsiderationEqualMonthlyInstallmentsMember2021-03-312021-03-310001463101enph:DINsSolarDesignServicesDivisionMemberenph:AdditionalConsiderationPayableOneYearAnniversaryMember2021-03-310001463101enph:DINsSolarDesignServicesDivisionMember2021-03-310001463101us-gaap:CustomerRelationshipsMemberenph:DINsSolarDesignServicesDivisionMember2021-03-310001463101us-gaap:CustomerRelationshipsMemberenph:DINsSolarDesignServicesDivisionMember2021-01-012021-03-310001463101us-gaap:IntellectualPropertyMember2021-03-310001463101us-gaap:IntellectualPropertyMember2021-01-012021-03-310001463101us-gaap:IntellectualPropertyMember2020-12-310001463101us-gaap:IntellectualPropertyMember2020-01-012020-12-310001463101us-gaap:CustomerRelationshipsMember2021-03-310001463101us-gaap:CustomerRelationshipsMember2021-01-012021-03-310001463101us-gaap:CustomerRelationshipsMember2020-12-310001463101us-gaap:CustomerRelationshipsMember2020-01-012020-12-310001463101us-gaap:TradeNamesMember2021-03-310001463101us-gaap:TradeNamesMember2021-01-012021-03-310001463101us-gaap:TradeNamesMember2020-12-310001463101us-gaap:TradeNamesMember2020-01-012020-12-3100014631012020-01-012020-12-310001463101us-gaap:DevelopedTechnologyRightsMember2021-01-012021-03-310001463101us-gaap:DevelopedTechnologyRightsMember2020-01-012020-03-310001463101us-gaap:CustomerRelationshipsMember2020-01-012020-03-310001463101us-gaap:TradeNamesMember2020-01-012020-03-310001463101enph:FieldPerformanceDataAndDiagnosticRootCauseFailureAnalysisMember2021-01-012021-03-310001463101enph:FieldPerformanceDataAndDiagnosticRootCauseFailureAnalysisMember2020-01-012020-03-310001463101enph:UnitCostsForPriorGenerationMicroinverterReplacementDrivenByTariffsMember2021-01-012021-03-310001463101enph:UnitCostsForPriorGenerationMicroinverterReplacementDrivenByTariffsMember2020-01-012020-03-310001463101us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2021-03-310001463101us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2021-03-310001463101us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2021-03-310001463101us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2020-12-310001463101us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2020-12-310001463101us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2020-12-310001463101us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2021-03-310001463101us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2021-03-310001463101us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001463101us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310001463101us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-12-310001463101us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001463101enph:ConvertibleSeniorNotesDue2028Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ConvertibleNotesPayableMember2021-03-310001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ConvertibleNotesPayableMember2021-03-310001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ConvertibleNotesPayableMember2021-03-310001463101us-gaap:FairValueMeasurementsRecurringMemberenph:ConvertibleSeniorNoteDue2024Memberus-gaap:FairValueInputsLevel2Memberus-gaap:ConvertibleNotesPayableMember2021-03-310001463101us-gaap:FairValueInputsLevel3Member2021-01-3100014631012021-01-310001463101us-gaap:DebtSecuritiesMember2021-02-012021-03-3100014631012021-01-250001463101enph:ContingentConsiderationLiabilityMember2021-01-262021-03-310001463101us-gaap:WarrantyRightsAndObligationsFairValueOptionMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001463101us-gaap:WarrantyRightsAndObligationsFairValueOptionMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001463101us-gaap:WarrantyRightsAndObligationsFairValueOptionMemberus-gaap:FairValueMeasurementsRecurringMember2021-01-012021-03-310001463101us-gaap:WarrantyRightsAndObligationsFairValueOptionMemberus-gaap:FairValueMeasurementsRecurringMember2020-01-012020-03-310001463101us-gaap:WarrantyRightsAndObligationsFairValueOptionMemberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001463101us-gaap:WarrantyRightsAndObligationsFairValueOptionMemberus-gaap:FairValueMeasurementsRecurringMember2020-03-310001463101enph:MeasurementInputProfitElementAndRiskPremiumMemberus-gaap:WarrantyRightsAndObligationsFairValueOptionMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001463101enph:MeasurementInputProfitElementAndRiskPremiumMemberus-gaap:WarrantyRightsAndObligationsFairValueOptionMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001463101us-gaap:MeasurementInputEntityCreditRiskMemberus-gaap:WarrantyRightsAndObligationsFairValueOptionMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001463101us-gaap:MeasurementInputEntityCreditRiskMemberus-gaap:WarrantyRightsAndObligationsFairValueOptionMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001463101enph:ConvertibleSeniorNotesDue2028Memberus-gaap:ConvertibleNotesPayableMember2021-03-310001463101enph:ConvertibleSeniorNotesDue2028Memberus-gaap:ConvertibleNotesPayableMember2020-12-310001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleNotesPayableMember2021-03-310001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleNotesPayableMember2020-12-310001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleNotesPayableMember2021-03-310001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleNotesPayableMember2020-12-310001463101enph:ConvertibleSeniorNoteDue2024Memberus-gaap:ConvertibleNotesPayableMember2021-03-310001463101enph:ConvertibleSeniorNoteDue2024Memberus-gaap:ConvertibleNotesPayableMember2020-12-310001463101enph:ConvertibleSeniorNotesDue2023Memberus-gaap:ConvertibleNotesPayableMember2021-03-310001463101enph:ConvertibleSeniorNotesDue2023Memberus-gaap:ConvertibleNotesPayableMember2020-12-310001463101us-gaap:FinanceReceivablesMemberenph:FinancingReceivableRecordedAsDebtMember2021-03-310001463101us-gaap:FinanceReceivablesMemberenph:FinancingReceivableRecordedAsDebtMember2020-12-310001463101enph:ConvertibleSeniorNotesDue2028Memberus-gaap:ConvertibleNotesPayableMember2021-03-010001463101enph:ConvertibleSeniorNotesDue2028Memberus-gaap:ConvertibleNotesPayableMember2021-03-012021-03-010001463101us-gaap:DebtInstrumentRedemptionPeriodOneMemberenph:ConvertibleSeniorNotesDue2028Memberus-gaap:ConvertibleNotesPayableMember2021-03-012021-03-01enph:trading_day0001463101us-gaap:DebtInstrumentRedemptionPeriodTwoMemberenph:ConvertibleSeniorNotesDue2028Memberus-gaap:ConvertibleNotesPayableMember2021-03-012021-03-010001463101enph:ConvertibleSeniorNotesDue2028Memberus-gaap:MeasurementInputDiscountRateMemberus-gaap:ConvertibleNotesPayableMember2021-03-310001463101enph:ConvertibleSeniorNotesDue2028Memberus-gaap:ConvertibleNotesPayableMember2021-01-012021-03-3100014631012021-03-012021-03-010001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleNotesPayableMember2021-03-010001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleNotesPayableMember2021-03-120001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleNotesPayableMember2021-03-012021-03-010001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:DebtInstrumentRedemptionPeriodOneMemberus-gaap:ConvertibleNotesPayableMember2021-03-012021-03-010001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:DebtInstrumentRedemptionPeriodTwoMemberus-gaap:ConvertibleNotesPayableMember2021-03-012021-03-010001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:DebtInstrumentRedemptionPeriodTwoMemberus-gaap:ConvertibleNotesPayableMember2020-03-092020-03-090001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:MeasurementInputDiscountRateMemberus-gaap:ConvertibleNotesPayableMember2021-03-010001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleNotesPayableMember2021-01-012021-03-310001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleNotesPayableMember2020-03-090001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleNotesPayableMember2020-03-092020-03-090001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:DebtInstrumentRedemptionPeriodOneMemberus-gaap:ConvertibleNotesPayableMember2020-03-092020-03-090001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:DebtInstrumentRedemptionPeriodTwoMemberus-gaap:ConvertibleNotesPayableMember2020-03-092020-03-090001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:DebtInstrumentRedemptionPeriodOneMemberus-gaap:ConvertibleNotesPayableMember2021-01-012021-03-310001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:SubsequentEventMemberus-gaap:ConvertibleNotesPayableMember2021-04-012021-04-2700014631012020-05-2000014631012020-05-190001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleNotesPayableMember2020-05-200001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleNotesPayableMember2021-03-012021-03-010001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleNotesPayableMember2021-01-012021-03-310001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleNotesPayableMember2021-03-010001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:MeasurementInputDiscountRateMemberus-gaap:ConvertibleNotesPayableMember2021-03-310001463101enph:ConvertibleSeniorNotesDue2025Memberus-gaap:ConvertibleNotesPayableMember2020-01-012020-03-310001463101us-gaap:ConvertibleNotesPayableMember2020-05-200001463101enph:ConvertibleSeniorNoteDue2024Memberus-gaap:ConvertibleNotesPayableMember2019-06-050001463101enph:ConvertibleSeniorNoteDue2024Memberus-gaap:ConvertibleNotesPayableMember2019-06-052019-06-050001463101us-gaap:DebtInstrumentRedemptionPeriodOneMemberenph:ConvertibleSeniorNoteDue2024Memberus-gaap:ConvertibleNotesPayableMember2019-06-052019-06-050001463101us-gaap:DebtInstrumentRedemptionPeriodOneMemberenph:ConvertibleSeniorNoteDue2024Memberus-gaap:ConvertibleNotesPayableMember2021-01-012021-03-310001463101us-gaap:DebtInstrumentRedemptionPeriodTwoMemberenph:ConvertibleSeniorNoteDue2024Memberus-gaap:ConvertibleNotesPayableMember2021-03-012021-03-010001463101us-gaap:DebtInstrumentRedemptionPeriodTwoMemberenph:ConvertibleSeniorNoteDue2024Memberus-gaap:ConvertibleNotesPayableMember2019-06-052019-06-050001463101us-gaap:MeasurementInputDiscountRateMemberenph:ConvertibleSeniorNoteDue2024Memberus-gaap:ConvertibleNotesPayableMember2019-06-050001463101enph:ConvertibleSeniorNoteDue2024Memberus-gaap:ConvertibleNotesPayableMember2021-01-012021-03-310001463101us-gaap:MeasurementInputDiscountRateMemberenph:ConvertibleSeniorNoteDue2024Memberus-gaap:ConvertibleNotesPayableMember2021-03-310001463101enph:ConvertibleSeniorNoteDue2024Memberus-gaap:ConvertibleNotesPayableMember2020-01-012020-03-310001463101enph:ConvertibleSeniorNotesDue2023Memberus-gaap:ConvertibleNotesPayableMember2018-08-310001463101enph:ConvertibleSeniorNotesDue2023Memberus-gaap:ConvertibleNotesPayableMember2019-06-052019-06-050001463101enph:ConvertibleSeniorNotesDue2023Memberus-gaap:ConvertibleNotesPayableMember2018-08-012018-08-310001463101enph:ConvertibleSeniorNotesDue2023Memberus-gaap:ConvertibleNotesPayableMember2021-01-012021-03-310001463101enph:ConvertibleSeniorNotesDue2023Memberus-gaap:ConvertibleNotesPayableMember2020-01-012020-03-310001463101us-gaap:FinanceReceivablesMemberenph:FinancingReceivableRecordedAsDebtMember2017-12-012017-12-310001463101us-gaap:FinanceReceivablesMemberenph:FinancingReceivableRecordedAsDebtMember2018-01-012018-12-310001463101enph:Section301TariffRefundsMember2020-03-260001463101enph:Section301TariffRefundsAccruedInterestMember2020-03-260001463101enph:Section301TariffRefundsMember2020-01-012020-12-310001463101enph:Section301TariffRefundsMember2020-12-310001463101enph:Section301TariffRefundsMember2021-01-012021-03-310001463101enph:Section301TariffRefundsAccruedInterestMember2020-12-310001463101enph:Section301TariffRefundsMember2021-03-310001463101us-gaap:CostOfSalesMember2021-01-012021-03-310001463101us-gaap:CostOfSalesMember2020-01-012020-03-310001463101us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-03-310001463101us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-03-310001463101us-gaap:SellingAndMarketingExpenseMember2021-01-012021-03-310001463101us-gaap:SellingAndMarketingExpenseMember2020-01-012020-03-310001463101us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-03-310001463101us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-03-310001463101enph:EmployeeStockOptionsAndRestrictedStockUnitsMember2021-01-012021-03-310001463101enph:EmployeeStockOptionsAndRestrictedStockUnitsMember2020-01-012020-03-310001463101us-gaap:EmployeeStockMember2021-01-012021-03-310001463101us-gaap:EmployeeStockMember2020-01-012020-03-310001463101enph:RangeOneMember2021-01-012021-03-310001463101enph:RangeOneMember2021-03-310001463101enph:RangeTwoMember2021-01-012021-03-310001463101enph:RangeTwoMember2021-03-310001463101enph:RangeThreeMember2021-01-012021-03-310001463101enph:RangeThreeMember2021-03-310001463101enph:RangeFourMember2021-01-012021-03-310001463101enph:RangeFourMember2021-03-310001463101enph:RangeFiveMember2021-01-012021-03-310001463101enph:RangeFiveMember2021-03-310001463101us-gaap:RestrictedStockUnitsRSUMember2020-12-310001463101us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001463101us-gaap:RestrictedStockUnitsRSUMember2021-03-310001463101us-gaap:PerformanceSharesMember2020-12-310001463101us-gaap:PerformanceSharesMember2021-01-012021-03-310001463101us-gaap:PerformanceSharesMember2021-03-310001463101enph:ConvertibleSeniorNoteDue2024Member2021-01-012021-03-310001463101enph:ConvertibleSeniorNoteDue2024Member2020-01-012020-03-310001463101enph:ConvertibleSeniorNotesDue2025Member2021-01-012021-03-310001463101enph:ConvertibleSeniorNotesDue2025Member2020-01-012020-03-310001463101us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001463101us-gaap:EmployeeStockOptionMember2020-01-012020-03-310001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleDebtSecuritiesMember2021-01-012021-03-310001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleDebtSecuritiesMember2020-01-012020-03-310001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:WarrantMember2021-01-012021-03-310001463101enph:ConvertibleSeniorNotesDue2026Memberus-gaap:WarrantMember2020-01-012020-03-310001463101us-gaap:ConvertibleDebtSecuritiesMemberenph:ConvertibleSeniorNotesDue2028Member2021-01-012021-03-310001463101us-gaap:ConvertibleDebtSecuritiesMemberenph:ConvertibleSeniorNotesDue2028Member2020-01-012020-03-310001463101us-gaap:WarrantMemberenph:ConvertibleSeniorNotesDue2028Member2021-01-012021-03-310001463101us-gaap:WarrantMemberenph:ConvertibleSeniorNotesDue2028Member2020-01-012020-03-310001463101enph:ConvertibleSeniorNotesDue2023Memberenph:ThurmanJohnRodgersMemberus-gaap:ConvertibleNotesPayableMember2018-12-310001463101enph:ConvertibleSeniorNotesDue2023Memberenph:ThurmanJohnRodgersMemberus-gaap:ConvertibleNotesPayableMember2020-12-310001463101enph:ConvertibleSeniorNotesDue2023Memberenph:ThurmanJohnRodgersMemberus-gaap:ConvertibleNotesPayableMember2021-03-31
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-35480
enph-20210331_g1.jpg
Enphase Energy, Inc.
(Exact name of registrant as specified in its charter)
Delaware
20-4645388
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
47281 Bayside Parkway
Fremont, CA 94538
(Address of principal executive offices, including zip code)
(877) 774-7000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.00001 par value per shareENPHNasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒ No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒ No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an “emerging growth company.” See the definitions of “large accelerated filer,” “accelerated filer, ” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
☒

Accelerated filer
☐

Non-accelerated filer
☐

Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐ No  ☒
As of April 23, 2021, there were 135,698,889 shares of the registrant’s common stock outstanding, $0.00001 par value per share.

Enphase Energy, Inc. | 2021 Form 10-Q | 1
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
ENPHASE ENERGY, INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021
TABLE OF CONTENTS
 
  Page
    

Enphase Energy, Inc. | 2021 Form 10-Q | 2
Table of Contents
PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements (Unaudited)
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)
As of
March 31,
2021		December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents$1,489,010 $679,379 
Accounts receivable, net of allowances of $746 and $462 at March 31, 2021 and December 31, 2020, respectively
236,090 182,165 
Inventory34,876 41,764 
Prepaid expenses and other assets31,386 29,756 
Total current assets1,791,362 933,064 
Property and equipment, net53,648 42,985 
Operating lease, right of use asset, net16,688 17,683 
Intangible assets, net47,917 28,808 
Goodwill61,038 24,783 
Other assets91,315 59,875 
Deferred tax assets, net132,231 92,904 
Total assets$2,194,199 $1,200,102 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$81,524 $72,609 
Accrued liabilities115,172 76,542 
Deferred revenues, current49,118 47,665 
Warranty obligations, current (includes $10,163 and $8,267 measured at fair value at March 31, 2021 and December 31, 2020, respectively)
14,303 11,260 
Debt, current84,356 325,967 
Total current liabilities344,473 534,043 
Long-term liabilities:
Deferred revenues, noncurrent142,985 125,473 
Warranty obligations, noncurrent (includes $23,156 and $20,469 measured at fair value at March 31, 2021 and December 31, 2020, respectively)
40,250 34,653 
Other liabilities15,777 17,042 
Debt, noncurrent917,873 4,898 
Total liabilities1,461,358 716,109 
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock, $0.00001 par value, 200,000 shares and 200,000 shares authorized; and 135,691 shares and 128,962 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively
1 1 
Additional paid-in capital751,688 534,744 
Accumulated deficit(19,488)(51,186)
Accumulated other comprehensive income640 434 
Total stockholders’ equity732,841 483,993 
Total liabilities and stockholders’ equity$2,194,199 $1,200,102 

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2021 Form 10-Q | 3
Table of Contents
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
20212020
Net revenues$301,754 $205,545 
Cost of revenues178,805 124,870 
Gross profit122,949 80,675 
Operating expenses:
Research and development21,818 11,876 
Sales and marketing19,622 11,772 
General and administrative20,123 12,315 
Total operating expenses61,563 35,963 
Income from operations61,386 44,712 
Other income (expense), net
Interest income73 1,091 
Interest expense(7,329)(3,155)
Other (expense) income, net573 (924)
Loss on partial settlement of convertible notes(56,369)— 
Change in fair value of derivatives— 15,344 
Total other income (expense), net(63,052)12,356 
Income (loss) before income taxes(1,666)57,068 
Income tax benefit33,364 11,868 
Net income$31,698 $68,936 
Net income per share:
Basic$0.24 $0.56 
Diluted$0.22 $0.50 
Shares used in per share calculation:
Basic131,303 123,531 
Diluted146,442 138,104 

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2021 Form 10-Q | 4
Table of Contents
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
Three Months Ended
March 31,
20212020
Net income$31,698 $68,936 
Other comprehensive income (loss):
Foreign currency translation adjustments206 (168)
Comprehensive income$31,904 $68,768 

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2021 Form 10-Q | 5
Table of Contents
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
Three Months Ended
March 31,
20212020
Common stock and paid-in capital
Balance, beginning of period$534,745 $458,316 
Issuance of common stock from exercise of equity awards214 1,979 
Payment of withholding taxes related to net share settlement of equity awards(9,185)(34,267)
Equity component of convertible notes issued, net of tax207,962 — 
Cost of convertible notes hedge related to the convertible notes issued, net of tax(213,322)— 
Sale of warrants related to the convertible notes issued220,800 — 
Equity component of partial settlement of convertible notes(966,483)— 
Cost of reacquired equity component on partial settlement of convertible notes962,114 — 
Stock-based compensation expense14,844 7,515 
Balance, end of period$751,689 $433,543 
Accumulated deficit
Balance, beginning of period$(51,186)$(185,181)
Net income31,698 68,936 
Balance, end of period$(19,488)$(116,245)
Accumulated other comprehensive income (loss)
Balance, beginning of period$434 $(923)
Foreign currency translation adjustments206 (168)
Balance, end of period$640 $(1,091)
Total stockholders' equity, ending balance
$732,841 $316,207 

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2021 Form 10-Q | 6
Table of Contents
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
20212020
Cash flows from operating activities:
Net income$31,698 $68,936 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization5,558 3,844 
Provision for doubtful accounts14 104 
Non-cash interest expense7,156 2,722 
Loss on partial settlement of convertibles notes56,369 — 
Deemed repayment of convertible notes attributable to accreted debt discount(15,579)— 
Change in fair value of debt security(1,437)— 
Stock-based compensation14,844 7,515 
Change in fair value of derivatives— (15,344)
Deferred income taxes(35,367)(12,500)
Changes in operating assets and liabilities:
Accounts receivable(53,719)49,637 
Inventory6,888 (2,560)
Prepaid expenses and other assets(5,040)(5,009)
Accounts payable, accrued and other liabilities36,376 (22,066)
Warranty obligations8,640 403 
Deferred revenues19,440 (36,460)
Net cash provided by operating activities75,841 39,222 
Cash flows from investing activities:
Purchases of property and equipment(9,940)(3,353)
Investment in a private company(25,000)— 
Business acquisitions, net of cash acquired(55,239)— 
Net cash used in investing activities(90,179)(3,353)
Cash flows from financing activities:
Issuance of convertible notes, net of issuance costs1,189,388 313,011 
Purchase of convertible note hedges(286,235)(89,056)
Sale of warrants220,800 71,552 
Principal payments and financing fees on debt(1,078)(1,148)
Partial repurchase of convertible notes(289,233)— 
Proceeds from exercise of equity awards and employee stock purchase plan214 1,979 
Payment of withholding taxes related to net share settlement of equity awards(9,185)(34,267)
Net cash provided by financing activities824,671 262,071 
Effect of exchange rate changes on cash and cash equivalents(702)(205)
Net increase in cash, cash equivalents and restricted cash809,631 297,735 
Cash, cash equivalents and restricted cash—Beginning of period679,379 296,109 
Cash. cash equivalents and restricted cash—End of period$1,489,010 $593,844 
Enphase Energy, Inc. | 2021 Form 10-Q | 7
Table of Contents
Three Months Ended
March 31,
20212020
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents1,489,010 549,144 
Restricted cash— 44,700 
Total cash, cash equivalents, and restricted cash$1,489,010 $593,844 
Supplemental cash flow disclosure:
Supplemental disclosures of non-cash investing and financing activities:
Purchases of fixed assets included in accounts payable$7,301 $585 
Contingent consideration in connection with the acquisition$3,500 $— 
Convertible senior note issuance costs included in accounts payable and accrued expense$991 $591 

See Notes to Condensed Consolidated Financial Statements.
Enphase Energy, Inc. | 2021 Form 10-Q | 8
Table of Contents

1.    DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business
Enphase Energy, Inc. (the “Company”) is a global energy technology company. The Company delivers smart, easy-to-use solutions that manage solar generation, storage and communication on one platform. The Company revolutionized the solar industry with its microinverter technology and produces a fully integrated solar-plus-storage solution.
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“U.S.”), or GAAP. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Unaudited Interim Financial Information
These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary to present fairly the Company’s financial condition, results of operations, comprehensive income, stockholders’ equity and cash flows for the interim periods indicated. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the operating results for the full year.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include revenue recognition, allowance for doubtful accounts, stock-based compensation, inventory valuation, accrued warranty obligations, fair value of investments, debt derivatives, convertible notes and contingent consideration, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, incremental borrowing rate for right-of-use assets and lease liability, legal contingencies, and tax valuation allowance. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from management’s estimates using different assumptions or under different conditions.
In light of the ongoing and quickly evolving COVID-19 pandemic, management has considered the impacts of the COVID-19 pandemic on the Company’s critical and significant accounting estimates and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, judgments or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s condensed financial statements.
The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the U.S. The Company filed audited consolidated financial statements, which included all information and notes necessary for such a complete presentation in conjunction with its Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 16, 2021 (“Form 10‑K”).
Enphase Energy, Inc. | 2021 Form 10-Q | 9
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Summary of Significant Accounting Policies
There have been no significant changes to the Company’s significant accounting policies in Note 2, “Summary of Significant Accounting Policies,” of the notes to consolidated financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Recently Issued Accounting Pronouncements Not Yet Effective
In August 2020, the FASB issued Account Standard Update (“ASU”) 2020-06, “Debt - Debt with Conversion and Other Options (subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (subtopic 815-40),” which reduces the number of accounting models in ASC 470-20 that require separate accounting for embedded conversion features. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. The treasury stock method should no longer be used to calculate diluted net income per share for convertible instruments. The amendment will be effective for the Company with annual period beginning January 1, 2022. The Company is evaluating the accounting, transition and disclosure requirements of the standard.
2.    REVENUE RECOGNITION
Disaggregated Revenue
The Company has one business activity, which is the design, manufacture and sale of solutions for the solar photovoltaic (“PV”) industry. Disaggregated revenue by primary geographical market and timing of revenue recognition for the Company’s single product line are as follows:
Three Months Ended
March 31,
20212020
(In thousands)
Primary geographical markets:
U.S.$247,782 $179,600 
International53,972 25,945 
Total$301,754 $205,545 
Timing of revenue recognition:
Products delivered at a point in time$288,871 $194,679 
Products and services delivered over time12,883 10,866 
Total$301,754 $205,545 
Contract Balances
Receivables, and contract assets and contract liabilities from contracts with customers are as follows:
March 31,
2021		December 31,
2020
(In thousands)
Receivables$236,090 $182,165 
Short-term contract assets (Prepaid expenses and other assets)19,338 17,879 
Long-term contract assets (Other assets)57,400 51,986 
Short-term contract liabilities (Deferred revenues)49,118 47,665 
Long-term contract liabilities (Deferred revenues)142,985 125,473 
Enphase Energy, Inc. | 2021 Form 10-Q | 10
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company receives payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include deferred product costs and commissions associated with the deferred revenue and will be amortized along with the associated revenue. The Company had no asset impairment charges related to contract assets in the three months ended March 31, 2021.
Significant changes in the balances of contract assets (prepaid expenses and other assets) during the period are as follows (in thousands):
Contract Assets
Contract Assets, beginning of period$69,865 
Amount recognized(4,955)
Increase11,828 
Contract Assets, end of period$76,738 
Contract liabilities are recorded as deferred revenue on the accompanying condensed consolidated balance sheets and include payments received in advance of performance obligations under the contract and are realized when the associated revenue is recognized under the contract.
Significant changes in the balances of contract liabilities (deferred revenues) during the period are as follows (in thousands):
Contract Liabilities
Contract Liabilities, beginning of period$173,138 
Revenue recognized(16,235)
Increase due to billings35,200 
Contract Liabilities, end of period$192,103 
Remaining Performance Obligations
Estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period are as follows:
March 31,
2021
(In thousands)
Fiscal year:
2021 (remaining nine months)$38,116 
202244,067 
202338,220 
202432,994 
202526,021 
Thereafter12,685 
Total$192,103 

Enphase Energy, Inc. | 2021 Form 10-Q | 11
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3.    OTHER FINANCIAL INFORMATION
Inventory
Inventory consist of the following:
March 31,
2021		December 31,
2020
(In thousands)
Raw materials$10,611 $10,140 
Finished goods24,265 31,624 
Total inventory$34,876 $41,764 
Accrued Liabilities
Accrued liabilities consist of the following:
March 31,
2021		December 31,
2020
(In thousands)
Salaries, commissions, incentive compensation and benefits$17,466 $6,634 
Customer rebates and sales incentives55,397 36,622 
Freight11,691 10,300 
Operating lease liabilities, current4,772 4,542 
Liability due to supply agreements4,310 5,500 
Contingent consideration4,193 — 
Other17,343 12,944 
Total accrued liabilities$115,172 $76,542 
4.    BUSINESS COMBINATION
Acquisition of Sofdesk Inc. (“Sofdesk”)
On January 25, 2021, the Company completed the acquisition of 100% of the shares of Sofdesk, a privately-held company. Sofdesk provides design tools and services software for residential solar installers and roofing companies and will enhance the Company’s digital transformation efforts.
As part of the purchase price, the Company (i) paid approximately $32.0 million in cash on January 25, 2021 and (ii) is liable for up to approximately $3.7 million of contingent consideration payable during the first quarter of 2022, of which the Company recorded a liability of approximately $3.5 million representing the fair value of the contingent consideration.
The contingent consideration is subject to remeasurement at each reporting period until paid. The acquisition date fair value of the purchase price was approximately $35.5 million, which consisted of the following (in thousands):
Cash consideration$31,988 
Fair value of contingent consideration3,500 
Total$35,488 
In addition to the purchase price discussed above, the Company will be obligated to pay up to approximately $3.7 million, during the first quarter of 2022, subject to continued employment of key employees of Sofdesk. As this payment is contingent upon the continuous service of the employees, it is being accounted for as a post-combination expense and will be recognized ratably over the one year period.
Enphase Energy, Inc. | 2021 Form 10-Q | 12
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The acquisition has been accounted for as a business combination under the acquisition method, and accordingly, the total purchase price is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values on the acquisition date. The results of operations of Sofdesk have been included in the Company’s condensed consolidated statement of operations from the acquisition date, though Sofdesk’s results of operations was not material for the three months ended March 31, 2021.
The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date, which are subject to change within the measurement period as the fair value assessments are finalized (in thousands):
Net tangible assets acquired$1,441 
Intangible assets9,200 
Deferred tax asset457 
Goodwill24,390 
Net assets acquired$35,488 
The excess of the consideration paid over the fair values assigned to the assets acquired and liabilities assumed represents the goodwill resulting from the acquisition. Goodwill is primarily attributable to expected synergies in the Company’s solar offerings and cross-selling opportunities.
Intangible assets consist primarily of developed technology, customer relationship intangibles and trade name intangibles. Intangible assets attributable to developed technology include a combination of unpatented technology, trade secrets, computer software and research processes that represent the foundation for the existing and planned new products to facilitate the generation of new content. Customer relationship intangibles relate to Sofdesk’s software ability to sell current and future offerings, as well as products built around the current offering, to its existing customers. Trade name intangibles are attributable to marketing goods and services under the SolargrafTM and RoofgrafTM brands.
The following table shows the fair value of the separately identifiable intangible assets at the time of acquisition and the period over which each intangible asset will be amortized:
Preliminary Fair ValueUseful Life
(In thousands)(Years)
Developed technology$6,900 5
Customer relationship1,800 5
Trade Name500 5
Total identifiable intangible assets$9,200 
The Company incurred costs related to this acquisition of $1.7 million that were recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2021.

Enphase Energy, Inc. | 2021 Form 10-Q | 13
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Acquisition of DIN’s Solar Design Services Business (“DIN”)
On March 31, 2021, the Company completed its acquisition of DIN’s solar design services business. DIN's solar design services business provides outsourced proposal drawings and permit plan sets for residential solar installers in North America and will enhance the Company’s digital transformation effort. As part of the purchase price, the Company paid approximately $24.8 million in cash at closing on March 31, 2021.
The acquisition has been accounted for as a business combination under the acquisition method; accordingly, the total purchase price is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values on the acquisition date.
In addition to the purchase price summarized above, the Company will be obligated to pay up to i) approximately $5.0 million in equal monthly installments over the course of one year following the acquisition date and ii) approximately $5.0 million payable on the one year anniversary following the acquisition date subject to achievement of certain revenue and operational targets. As both the additional payments require continuous employment of certain key employees of DIN and are subject to other conditions, these payments are being accounted for as post-combination expense and will be recognized ratably over the one year period.
The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date, which are subject to change within the measurement period as the fair value assessments are finalized (in thousands):
Net tangible assets acquired$1,541 
Intangible assets11,700 
Goodwill11,544 
Net assets acquired$24,785 
The excess of the consideration paid over the fair values assigned to the assets acquired and liabilities assumed represents the goodwill resulting from the acquisition. Goodwill is primarily attributable to expected synergies in the Company’s solar offerings and cross-selling opportunities.
Intangible assets consist primarily of customer relationship intangibles. Customer relationship intangibles relate to the ability of the acquired DIN solar design services business to sell current and future offering, as well as products built around the current offering, to its existing customers.
The following table shows the fair value of the separately identifiable intangible assets at the time of acquisition and the period over which each intangible asset will be amortized:
Preliminary Fair ValueUseful Life
(In thousands)(Years)
Customer relationship$11,700 5
The Company incurred costs related to this acquisition of $1.4 million that were recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2021.
Enphase Energy, Inc. | 2021 Form 10-Q | 14
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5.    GOODWILL AND INTANGIBLE ASSETS
The Company’s goodwill and purchased intangible assets as of March 31, 2021 and December 31, 2020 are as follows:
March 31, 2021December 31, 2020
GrossAdditionsAccumulated AmortizationNetGrossAdditionsAccumulated AmortizationNet
(In thousands)
Goodwill$24,783 $36,255 $— $61,038 $24,783 $— $— $24,783 
Intangible assets:
Other indefinite-lived intangibles286 — — 286 286 — — 286 
Intangible assets with finite lives:
Developed technology13,100 6,900 (6,075)13,925 13,100 — (5,276)7,824 
Customer relationships26,421 13,500 (6,653)33,268 23,100 3,321 (5,723)20,698 
Trade names— 500 (62)438 — — — — 
Total purchased intangible assets$39,807 $20,900 $(12,790)$47,917 $36,486 $3,321 $(10,999)$28,808 
Amortization expense related to finite-lived intangible assets are as follows:
Three Months Ended
March 31,
20212020
(In thousands)
Developed technology$799 $546 
Customer relationships
930 701 
Trade names62 — 
Total amortization expense
$1,791 $1,247 
Amortization of developed technology, customer relationships and trade names is recorded to sales and marketing expense.
Enphase Energy, Inc. | 2021 Form 10-Q | 15
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6.    WARRANTY OBLIGATIONS
The Company’s warranty activities were as follows:
Three Months Ended
March 31,
20212020
(In thousands)
Warranty obligations, beginning of period$45,913 $37,098 
Accruals for warranties issued during period3,894 1,524 
Changes in estimates7,655 1,677 
Settlements(2,930)(3,270)
Increase due to accretion expense943 774 
Other(922)(302)
Warranty obligations, end of period54,553 37,501 
Less: current portion(14,303)(9,678)
Noncurrent$40,250 $27,823 
Changes in Estimates
In the three months ended March 31, 2021 and 2020, the Company recorded a $6.3 million and $1.5 million, respectively, increase to warranty expense based on continuing analysis of field performance data and diagnostic root-cause failure analysis primarily relating to its prior generation products. The Company also recorded additional warranty expense of $1.3 million and $0.2 million in the three months ended March 31, 2021 and 2020, respectively, related to unit costs for prior generation microinverter replacement mainly driven by tariffs.

7.    FAIR VALUE MEASUREMENTS
The accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:
•Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of such assets or liabilities do not entail a significant degree of judgment.
•Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
•Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
Enphase Energy, Inc. | 2021 Form 10-Q | 16
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2021December 31, 2020
(In thousands)
Level 1Level 2Level 3Level 1Level 2Level 3
Assets:
Cash and cash equivalents:
Money market funds$1,463,750 $— $— $654,699 $— $— 
Other assets
Investment in debt security— — 26,437 — — — 
Total assets measured at fair value$1,463,750 $— $26,437 $654,699 $— $— 
Liabilities:
Accrued liabilities
Contingent consideration$— $— $3,540 $— $— $— 
Warranty obligations
Current— — 10,163 — — 8,267 
Non-current— — 23,156 — — 20,469 
Total warranty obligations measured at fair value— — 33,319 — — 28,736 
Total liabilities measured at fair value$— $— $36,859 $— $— $28,736 
Level 1. The Company considers all highly liquid investments, such as certificates of deposit and money market instruments with maturities of three months or less at the time of acquisition to be cash equivalents. For all periods presented, its cash balances consist of amounts held in non-interest-bearing and interest-bearing deposits and money market accounts and are within Level 1 of the fair value hierarchy because they are valued using quoted market prices for identical instruments in active markets.
Enphase Energy, Inc. | 2021 Form 10-Q | 17
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Level 2.
Notes due 2028, Notes due 2026, Notes due 2025 and Notes due 2024.
The Company carries the Notes due 2028, Notes due 2026, Notes due 2025 and Notes due 2024 (as defined below) at face value less unamortized discount and issuance costs on its condensed consolidated balance sheets. The fair value of the Notes due 2028, Notes due 2026, Notes due 2025 and Notes due 2024 was $538.3 million, $596.1 million, $218.7 million and $9.1 million, respectively, as of March 31, 2021 based on the closing trading prices per $100 principal amount as of the last day of trading for the period. The Company considers the fair value of the Notes due 2028, Notes due 2026, Notes due 2025 and Notes due 2024 to be a Level 2 measurement as they are not actively traded.
Level 3.
Investment in debt security.
In January 2021, the Company invested approximately $25.0 million in a privately-held company. The Company concluded the investment qualifies as an investment in a debt security as it accrues interest and principal plus accrued interest become payable back to the Company at certain dates unless it is converted to equity at a pre-determined price. As the investment includes a conversion option, the Company has elected to account for this investment under the fair value option and any change in fair value of the investment is recognized in “Other income (expense)”, net in the Company’s condensed consolidated statement of operations for that period. Further, the Company has concluded that the Company’s investment in debt security is considered to be a Level 3 measurement due to the use of significant unobservable inputs in the valuation model. These assumption include implied yield and change in estimated term of investment being held-to-maturity.
Three Months Ended
March 31,
2021
(In thousands)
Initial investment (January 2021)$25,000 
Fair value adjustments included in other income (expenses), net1,437 
Balance at end of period$26,437 
Contingent consideration.
The estimated fair value of the contingent consideration incurred in connection with the Company’s acquisition of Sofdesk is considered to be a Level 3 measurement due to the use of significant unobservable inputs. These unobservable inputs include probability assessment of expected future customer count over the period in which the obligation is expected to be settled. The value was determined using a discounted risk-neutral expected (probability-weighted) cash flow methodology. The resulting expected contingent consideration payment is discounted back to present value using our cost of debt. The fair value of contingent consideration arrangement is reassessed quarterly based on assumptions used in the Company’s latest projections and input provided by management. Any change in the fair value estimate, which could include accretion of interest expense due to passage of time as well as any changes in the inputs to the model, is recorded in the Company’s condensed consolidated statement of operations for that period.
Enphase Energy, Inc. | 2021 Form 10-Q | 18
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table reflects the activity for the Company’s contingent consideration liabilities measured at fair value using Level 3 inputs for the three months ended March 31, 2021 (in thousands):
Three Months Ended
March 31,
2021
(In thousands)
Balance at acquisition (January 25, 2021)$3,500 
Fair value adjustments included in other income (expense), net40 
Balance at end of period$3,540 
Warranty obligations.
Fair Value Option for Warranty Obligations Related to Microinverters and Other Products Sold Since January 1, 2014
The Company estimates the fair value of warranty obligations by calculating the warranty obligations in the same manner as for sales prior to January 1, 2014 and applying an expected present value technique to that result. The expected present value technique, an income approach, converts future amounts into a single current discounted amount. In addition to the key estimates of failure rates, claim rates and replacement costs, the Company used certain Level 3 inputs which are unobservable and significant to the overall fair value measurement. Such additional assumptions included a discount rate based on the Company’s credit-adjusted risk-free rate and compensation comprised of a profit element and risk premium required of a market participant to assume the obligation.
The following table provides information regarding changes in nonfinancial liabilities related to the Company’s warranty obligations measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods indicated.
Three Months Ended
March 31,
20212020
(In thousands)
Balance at beginning of period$28,736 $19,806 
Accruals for warranties issued during period3,894 1,524 
Changes in estimates2,583 615 
Settlements(1,915)(1,993)
Increase due to accretion expense943 774 
Other(922)(301)
Balance at end of period$33,319 $20,425 
Quantitative and Qualitative Information about Level 3 Fair Value Measurements
As of March 31, 2021 and December 31, 2020, the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 are as follows:
Percent Used
(Weighted Average)
Item Measured at Fair ValueValuation TechniqueDescription of Significant Unobservable InputMarch 31,
2021		December 31,
2020
Warranty obligations for microinverters sold since January 1, 2014Discounted cash flowsProfit element and risk premium15%15%
Credit-adjusted risk-free rate13%13%
Enphase Energy, Inc. | 2021 Form 10-Q | 19
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Sensitivity of Level 3 Inputs - Warranty Obligations
Each of the significant unobservable inputs is independent of the other. The profit element and risk premium are estimated based on requirements of a third-party participant willing to assume the Company’s warranty obligations. The credit‑adjusted risk‑free rate (“discount rate”) is determined by reference to the Company’s own credit standing at the fair value measurement date. Increasing the profit element and risk premium input by 100 basis points would result in a $0.3 million increase to the liability. Decreasing the profit element and risk premium by 100 basis points would result in a $0.3 million reduction of the liability. Increasing the discount rate by 100 basis points would result in a $1.5 million reduction of the liability. Decreasing the discount rate by 100 basis points would result in a $1.7 million increase to the liability.
8.    DEBT
The following table provides information regarding the Company’s debt.
March 31,
2021		December 31,
2020
(In thousands)
Convertible notes
Notes due 2028$575,000 $— 
Less: unamortized discount and issuance costs(164,905)— 
Carrying amount of Notes due 2028410,095 — 
Notes due 2026632,500 — 
Less: unamortized discount and issuance costs(129,630)— 
Carrying amount of Notes due 2026502,870 — 
Notes due 2025102,260 320,000 
Less: unamortized discount and issuance costs(19,657)(64,979)
Carrying amount of Notes due 202582,603 255,021 
Notes due 20241,068 88,140 
Less: unamortized discount and issuance costs(217)(19,119)
Carrying amount of Notes due 2024851 69,021 
Notes due 20235,000 5,000 
Less: unamortized issuance costs(92)(102)
Carrying amount of Notes due 20234,908 4,898 
Sale of long-term financing receivable recorded as debt902 1,925 
Total carrying amount of debt1,002,229 330,865 
Less: current portion of convertible notes and long-term financing receivable recorded as debt(84,356)(325,967)
Long-term debt$917,873 $4,898 

Enphase Energy, Inc. | 2021 Form 10-Q | 20
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Convertible Senior Notes due 2028
On March 1, 2021, the Company issued $575 million aggregate principal amount of 0.0% convertible senior notes due 2028 (the “Notes due 2028”). The Notes due 2028 will not bear regular interest, and the principal amount of the Notes due 2028 will not accrete. The Notes due 2028 are general unsecured obligations and are governed by an indenture between the Company and U.S. Bank National Association, as trustee. The Notes due 2028 will mature on March 1, 2028, unless earlier repurchased by the Company or converted at the option of the holders. The Company received approximately $566.4 million in net proceeds, after deducting the initial purchasers’ discount, from the issuance of the Notes due 2028.
The initial conversion rate for the Notes due 2028 is 3.5104 shares of common stock per $1,000 principal amount of the Notes due 2028 (which represents an initial conversion price of approximately $284.87 per share). The conversion rate for the Notes due 2028 will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid special interest, if any. In addition, if a make-whole fundamental change or a redemption with respect to the Notes due 2028 occurs prior to the maturity date, under certain circumstances as specified in the relevant indenture, the Company will increase the conversion rate for the Notes due 2028 by a number of additional shares of the Company’s common stock for a holder that elects to convert its notes in connection with such make-whole fundamental change or redemption. Upon conversion, the Company will settle conversions of the Notes due 2028 through payment or delivery, as the case may be, of cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.
The Company may not redeem the Notes due 2028 prior to September 6, 2024. The Company may redeem for cash all or any portion of the Notes due 2028, at the Company’s election, on or after September 6, 2024, if the last reported sale price of the Company’s common stock has been greater than or equal to 130% of the conversion price then in effect for the Notes due 2028 (i.e. $370.33, which is 130% of the current conversion price for the Notes due 2028) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The redemption price will equal 100% of the principal amount of the Notes due 2028 to be redeemed, plus accrued and unpaid special interest, if any to, but excluding, the relevant redemption date. No sinking fund is provided for the Notes due 2028.
The Notes due 2028 may be converted on any day prior to the close of business on the business day immediately preceding September 1, 2027, in multiples of $1,000 principal amount, at the option of the holder only under any of the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the Notes due 2028 (i.e, $370.33 which is 130% of the current conversion price for the Notes due 2028) on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the relevant indenture) per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the Notes due 2028 on each such trading day; (3) if the Company calls any or all of the Notes due 2028 for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after September 1, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date of March 1, 2028, holders of the Notes due 2028 may convert their notes at any time, regardless of the foregoing circumstances. Upon the occurrence of a fundamental change (as defined in the relevant indenture), holders may require the Company to repurchase all or a portion of their Notes due 2028 for cash at a price equal to 100% of the principal amount of the notes to be repurchased plus any accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.
Enphase Energy, Inc. | 2021 Form 10-Q | 21
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In accounting for the issuance of the Notes due 2028 on March 1, 2021, the Company separated the Notes due 2028 into liability and equity components. The carrying amount of the liability component of approximately $415.0 million was calculated by using a discount rate of 4.77%, which was the Company’s borrowing rate on the date of the issuance of the Notes due 2028 for a similar debt instrument without the conversion feature. The carrying amount of the equity component of approximately $160.0 million, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the Notes due 2028. The equity component of the Notes due 2028 is included in additional paid-in capital in the condensed consolidated balance sheet and is not remeasured as long as it continues to meet the conditions for equity classification. The difference between the principal amount of the Notes due 2028 and the liability component (the “debt discount”) is amortized to interest expense using the effective interest method over the term of the Notes due 2028.
Debt issuance costs for the issuance of the Notes due 2028 were approximately $9.1 million, consisting of initial purchasers' discount and other issuance costs. In accounting for the transaction costs, the Company allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds from the Notes due 2028. Transaction costs attributable to the liability component were approximately $6.6 million, were recorded as debt issuance cost (presented as contra debt in the condensed consolidated balance sheet) and are being amortized to interest expense over the term of the Notes due 2028. The transaction costs attributable to the equity component were approximately $2.5 million and were netted with the equity component in stockholders’ equity. As of March 31, 2021, the unamortized deferred issuance cost for the Notes due 2028 was $6.5 million, on the condensed consolidated balance sheet.
The following table presents the total amount of interest cost recognized in the statement of operations relating to the Notes due 2028:
Three Months Ended
March 31,
2021
(In thousands)
Amortization of debt discount$1,611 
Amortization of debt issuance costs79 
Total interest cost recognized$1,690 
The effective interest rate on the liability component Notes due 2028 was 4.77% for the three months ended March 31, 2021, which remains unchanged from the date of issuance. The remaining unamortized debt discount was $158.4 million as of March 31, 2021, and will be amortized over approximately 6.9 years from March 31, 2021.
Notes due 2028 Hedge and Warrant Transactions
In connection with the offering of the Notes due 2028, the Company entered into privately-negotiated convertible note hedge transactions (“Notes due 2028 Hedge”) pursuant to which the Company has the option to purchase a total of approximately 2.0 million shares of its common stock (subject to anti-dilution adjustments), which is the same number of shares initially issuable upon conversion of the Notes due 2028, at a price of $284.87 per share, which is the initial conversion price of the Notes due 2028. The total cost of the convertible note hedge transactions was approximately $161.6 million. The convertible note hedge transactions are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of the Notes due 2028 and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be.
Enphase Energy, Inc. | 2021 Form 10-Q | 22
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Additionally, the Company separately entered into privately-negotiated warrant transactions (the “2028 Warrants”) whereby the Company sold warrants to acquire approximately 2.0 million shares of the Company’s common stock (subject to anti-dilution adjustments) at an initial strike price of $397.91 per share. The Company received aggregate proceeds of approximately $123.4 million from the sale of the Warrants. If the market value per share of the Company’s common stock, as measured under the 2028 Warrants, exceeds the strike price of the 2028 Warrants, the 2028 Warrants will have a dilutive effect on the Company’s earnings per share, unless the Company elects, subject to certain conditions, to settle the 2028 Warrants in cash. Taken together, the purchase of the Notes due 2028 Hedge and the sale of the 2028 Warrants are intended to reduce potential dilution from the conversion of the Notes due 2028 and to effectively increase the overall conversion price from $284.87 to $397.91 per share. The 2028 Warrants are only exercisable on the applicable expiration dates in accordance with the Notes due 2028 Hedge. Subject to the other terms of the Warrants, the first expiration date applicable to the Notes due 2028 Hedge is June 1, 2028, and the final expiration date applicable to the Notes due 2028 Hedge is July 27, 2028.
Given that the transactions meet certain accounting criteria, the Notes due 2028 Hedge and the 2028 Warrants transactions are recorded in stockholders’ equity, and they are not accounted for as derivatives and are not remeasured each reporting period.
Enphase Energy, Inc. | 2021 Form 10-Q | 23
Table of Contents
ENPHASE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Convertible Senior Notes due 2026
On March 1, 2021, the Company issued $575.0 million aggregate principal amount of 0.0% convertible senior notes due 2026 (the “Notes due 2026”). In addition, on March 12, 2021, the Company issued an additional $57.5 million aggregate principal amount of the Notes due 2026 pursuant to the initial purchasers’ full exercise of the over-allotment option for additional Notes due 2026. The Notes due 2026 will not bear regular interest, and the principal amount of the Notes due 2026 will not accrete. The Notes due 2026 are general unsecured obligations and are governed by an indenture between the Company and U.S. Bank National Association, as trustee. The Notes due 2026 will mature on March 1, 2026, unless earlier repurchased by the Company or converted at the option of the holders. The Company received approximately $623.0 million in net proceeds, after deducting the initial purchasers’ discount, from the issuance of the Notes due 2026.
The initial conversion rate for the Notes due 2026 is 3.2523 shares of common stock per $1,000 principal amount of the Notes due 2026 (which represents an initial conversion price of approximately $307.47 per share). The conversion rate for the Notes due 2026 will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, if a make-whole fundamental change or a redemption with respect to the Notes due 2026 occurs prior to the maturity date, under certain circumstances as specified in the relevant indenture, the Company will increase the conversion rate for the Notes due 2026 by a number of additional shares of the Company’s common stock for a holder that elects to convert its notes in connection with such make-whole fundamental change or redemption. Upon conversion, the Company will settle conversions of Notes due 2026 through payment or delivery, as the case may be, of cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.
The Company may not redeem the Notes due 2026 prior to the September 6, 2023. The Company may redeem for cash all or any portion of the Notes due 2026, at the Company’s election, on or after September 6, 2023, if the last reported sale price of the Company’s common stock has been greater than or equal to 130% of the conversion price then in effect for the Notes due 2026 (i.e., $399.71, which is 130% of the current conversion price for the Notes due 2026) for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The redemption price will equal 100% of the principal amount of the Notes due 2026 to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the relevant redemption date for the Notes due 2026. The redemption price will be increased as described in the relevant indentures by a number of additional shares of the Company in connection with such optional redemption by the Company. No sinking fund is provided for the Notes due 2026.
The Notes due 2026 may be converted on any day prior to the close of business on the business day immediately preceding September 1, 2025, in multiples of $1,000 principal amount, at the option of the holder only under any of the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price of the Notes due 2026 (i.e., $399.71, which is 130% of the current conversion price for the Notes due 2026) on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the relevant indenture) per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for Notes due 2026 on each such trading day; (3) if the Company calls any or all of the Notes due 2026 for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after June 30, 2021 until the close of business on the second scheduled trading day immediately preceding the maturity date of March 1, 2026, holders of the Notes due 2026 may convert their notes at any time, regardless of the foregoing circumstances. Upon the occurrence of a fundamental change (as defined in the relevant indenture), holders may require the Company to repurchase all or a portion of their Notes due 2026 for cash at a price equal to 100% of the principal amount of the notes to be repurchased plus any accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.
Enphase Energy, Inc. | 2021 Form 10-Q | 24
Table of Contents
ENPHASE ENERGY, INC.