Will the Enphase IPO Be A Bust?


Microinverters and their distributed optimization cousins are on thelips and minds of every person with any interest in the future of thesolar industry.  In our conversations with the market, no other topicelicits more opinions and controversy, except perhaps outsourced versus domestic manufacturing and Eric Wesoff’s tirades.  Despite the attention and promise of growth however, Enphase,SolarEdge, et. al. netted a paltry 2% of the overall PV inverterindustry value in 2010, as reported in GTM Research’s most recent report on the Global PV Inverter Landscape.  Nevertheless, news within and focus on this tiny, but promising, market segment is never in shortage.

Enphase made a splash earlier this month with an S-1 filing in which the micro-inverter company is targeting $100 million in new capital in a potential IPO.  A week later, an additional SEC filing showed that Enphase is seeking $51 million in another round of fundraising, of which $17 million has already been raised.  The S-1 filing shows thatthe company still has at least $30 million in reserves, and while thecompany has been unprofitable, gross margins have been improving.   

So what can we learn by diving deeper into Enphase’s S-1?  For one,revenues, and presumably estimated shipments of Enphase micro-inverters, have been lumpy.  Enphase saw a jump in Q3 2010 with aquarter-over-quarter increase of 74 percent.  This would havecorresponded to the U.S.’s natural seasonality cycle as well as the peak in the global shortage of string inverters.  Furthermore, a handful ofsmall commercial integrators began to warm up to using microinverters in projects during the latter half of 2010.

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