Enphase Energy Inc 2025 Annual Report

ENPHASE ENERGY, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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-usesolutions that manage solar generation, storage and communication on one platform.The Company’s intelligent microinverters Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements are presented in accordance with accounting principlesgenerally accepted in the United States (“U.S. GAAP”). The condensed consolidated financial statements include the accounts Unaudited Interim Financial Information These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rulesand regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting. In the opinion ofmanagement, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of income and expenses during the reporting period. Significant estimatesand assumptions reflected in the financial statements include revenue recognition, allowance for credit losses, stock-basedcompensation, deferred compensation arrangements, income tax provision, inventory valuation, government grants, accrued The year-end condensed consolidated balance sheet data was derived from audited financial statements but does notinclude all disclosures required by U.S. GAAP. The Company filed audited consolidated financial statements, which included all Summary of Significant Accounting Policies There have been no changes to the Company’s significant accounting policies as described in Note 2, “Summary ofSignificant Accounting Policies” of the notes to consolidated financial statements included in Part II, Item 8 of the Form 10-K. Recently Adopted Accounting Pronouncements Not Yet Adopted In December 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”)2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires that anentity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling ENPHASE ENERGY, INC. federal income tax expenses and taxes paid. ASU 2023-09 was effective for fiscal years beginning after December 15, 2024 andinterim periods for fiscal years beginning after December 15, 2025. The Company plans to adopt ASU 2023-09 in its annualreport on Form 10-K for the year ending December 31, 2025. As ASU 2023-09 affects only disclosures, the adoption of ASU Recently Issued Accounting Pronouncements Not Yet Effective In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-ExpenseDisaggregation Disclosures” (“ASU 2024-03”), which requires additional disclosure of certain costs and expenses within thenotes to the financial statements. ASU 2024-03 will be effective for fiscal years beginning after December 15, 2026, and interim 2.REVENUE RECOGNITION Disaggregated Revenue The Company has one major business activity, which is the design, manufacture and sale of solutions for the solarphotovoltaic (“PV”) industry.Disaggregated revenue by primary geographical market and timing of revenue recognition for theCompany’s single product line are as follows: Contract Balances Accounts receivable, and contract assets and contract liabilities from contracts with customers, are as follows: Accounts receivable Contract assets include deferred product costs and commissions associated with the deferred revenue and will beamortized along with the associated revenue. The Company hadnoasset impairment charges related to contract assets for thethree months ended March 31, 2025. Significant changes in the balances of contract assets (prepaid expenses and other current assets) as of March31, 2025are as follows (in thousands): Contract liabilities are recorded as deferred revenue on the accompanying condensed consolidated balance sheets andinclude payments received in advance of performance obligations under the contract and are realized when the associated Significant changes in contract liabilities (deferred revenues) as of March31, 2025 are as follows (in thousands): Contract Liabilities Remaining Performance Obligations Estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied orpartially unsatisfied at the end of the reporting period are as follo