Shares of Enphase Energy fell 11.5% after the company reported first quarter 2026 results marked by a sharp sequential revenue decline and ongoing inventory overhang in its core U.S. market. Investors were disappointed largely by significant deceleration in U.S. residential demand, with management noting elevated channel inventory and subdued sell-through following tax credit expirations.

• Q1 2026 revenue was $282.9 million, impacted by a 23% sequential decline in U.S. revenue and a 48% drop in overall sell-through versus Q4 due to demand pull-forward and now overstocked channels.
• Gross margin of 44% came in above the midpoint of guidance, but this was overshadowed by persistent channel inventory issues and a muted residential outlook in the U.S.
• International markets showed improvement, with Europe revenue up 36% sequentially and notable increases in battery activations—driven by rising power prices and shifting regulatory landscapes in markets like the Netherlands, France, and Germany.
• Commercial microinverter sales in the U.S. more than doubled from Q4, but this segment remains much smaller than the challenged residential business.
• Management highlighted positive developments in AI-powered customer service and new product rollouts, but the cautious commentary and ongoing U.S. headwinds weighed heavily on the market response.