Release Date: April 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: As you start entering some of these newer markets with energy storage, can you talk about how much of the volume you're guiding to 2Q could be considered selling into to build a little bit of inventory to support those customers?
A: (Badrinarayanan Kothandaraman - President, CEO & Director) Not much really because the new markets are just ramping for us. For example, we introduced storage into Italy in Q1. So really, that's the only one where we introduced into a new market. Our storage channel is very healthy and normalized as we speak.
Q: On the pricing dynamic, it looks like microinverter pricing was down maybe 4-ish, 5% quarter-over-quarter on average. Can you talk a little bit about the dynamic around pricing and discounts as you get through the inventory flush and what we can expect as you get into the middle of the year here?
A: (Badrinarayanan Kothandaraman - President, CEO & Director) We are very disciplined with pricing. What you are seeing is a result of product mix, but we are extremely disciplined when it comes to pricing. We sell on value, and we do not lower pricing just to move inventory.
Q: You said at the onset of the call that you undership demand in Q1 a little bit less than or destocked a little bit less than you would have expected just because demand was softer. So the $90 million of destock, that should clear the inventory for micros in 2Q in your guide. You're saying normalized, you're seeing $400 million. So are you inferring that normalized demand when you strip out the $90 million of destock is running at like $490 million?
A: (Badrinarayanan Kothandaraman - President, CEO & Director) In Q1, our sell-through demand was $376 million, and we reported revenue of $263.3 million. Therefore, you can do the math, $376 million minus $263 million is $113 million of undershipment. Now in Q2, I guided $290 million to $330 million. Midpoint of guidance is $310 million. And now I said my estimated sell-through in Q2, which is reflective of end customer demand is $400 million. So the difference between the two, $310 million minus $400 million or the other way, $400 million minus $310 million is the $90 million of undershipment.
Q: Can you talk a little bit about -- you said at the onset of the call that you undership demand in Q1 a little bit less than -- or destocked a little bit less than you would have expected just because demand was softer. So the $90 million of destock, that should kind of clear the inventory for micros in 2Q in your guide. You're saying normalized, you're seeing $400 million.
A: (Badrinarayanan Kothandaraman - President, CEO & Director) Yes, in Q1, our sell-through demand was $376 million, and we reported revenue of $263.3 million. Therefore, you can do the math, $376 million minus $263 million is $113 million of undershipment. Now in Q2, I guided $290 million to $330 million. Midpoint of guidance is $310 million. And now I said my estimated sell-through in Q2, which is reflective of end customer demand is $400 million. So the difference between the two, $310 million minus $400 million or the other way, $400 million minus $310 million is the $90 million of undershipment.
Q: So Badri, first one, you indicated last quarter sell-through expectations for Q1 of $390 million to $430 million and sell-through, to your point, came in at $376 million. And in the spirit of continuous improvement, I was wondering if you could just walk us through the specific input or approach to your forecasting methodology that was faulty and then how you've adjusted for those errors heading into the second quarter?
A: (Badrinarayanan Kothandaraman - President, CEO & Director) In general, we are not perfect. We forecast based on the seasonality, we were right in most places. And as I reported, the California numbers were a little bit little bit worse. And you can see that the sell-through in California was about 30% lower, 37% on microinverters and about, I think, 18% or 19% on batteries. So I think California was the wildcard, which I did mention in the prior quarter. And I think we are getting the increasing confidence in California. I outlined everything which we -- which we discussed with the California installers. So we are confident in our forecast right now and the first few weeks of the quarter seem to be trending in that direction.
Q: On IQ9. You indicated the first half 2025 commercial release date, and I think you said pilots later this year. How long would it take for IQ9 to ramp to 100%? And then just strategically, can you talk about how you're thinking about using a lower-cost product, both in the U.S. and in international markets, from a share perspective?
A: (Badrinarayanan Kothandaraman - President, CEO & Director) IQ9, first of all, we're going to -- we are working on two flavors. One is a 427-watt microinverter and the other is the 548-watt microinverter. The 427-watt microinverter would be what I would consider the bread and butter for the U.S. in probably a year from today, which is right in the time frame that we are introducing. And I would say that typically, an introduction and the ramp for a new product like that would be 4 to 6 quarters based upon our experience with IQ8. So two flavors, 427 and 548.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
