Financial Data and Key Metrics Changes - The company reported quarterly revenue of $363.2 million, with a gross margin of 49% and operating income of 27% on a non-GAAP basis [5][6][40] - Free cash flow generated was $18.4 million, and cash flow from operations was $26.6 million [5][45] - Non-GAAP diluted earnings per share increased to $0.69 from $0.68 in the previous quarter [43] Business Line Data and Key Metrics Changes - The company shipped approximately 1.53 million microinverters and 190.9 megawatt hours of batteries in Q2 [5][39] - Domestic battery production increased, with shipments of 46.9 megawatt hours compared to 44.1 megawatt hours in Q1 [8] - The gross margin was impacted by tariffs, with a 2% gross margin effect observed in Q2 [10] Market Data and Key Metrics Changes - U.S. revenue increased by 3% in Q2 compared to Q1, while international revenue increased by 11% [12][18] - The overall sell-through of products was up 17% in Q2 compared to Q1 [12] - The U.S. and international revenue mix for Q2 was 75% and 25%, respectively [11] Company Strategy and Development Direction - The company is focusing on innovative financing structures to maximize tax credit capture and expand lease financing availability [15][50] - A multi-pronged strategy is being executed to lead the industry through transitions, including partnerships with third-party owners [15][18] - The company aims to reduce customer acquisition costs and drive down installation costs to remain competitive [14][56] Management's Comments on Operating Environment and Future Outlook - Management expects a 20% drop in total addressable market (TAM) in 2026 due to the expiration of the 25D tax credit [53][67] - The U.S. solar market is showing signs of improvement, with rising battery attach rates and seasonal demand contributing to increased momentum [13][14] - The company anticipates continued growth in the U.S. and seasonal softness in Europe for Q3 [24][45] Other Important Information - The company is on track to have non-China cells by the end of the year, which will help meet compliance requirements [9] - The company has a share repurchase program authorized for $1 billion, with $30 million repurchased in Q2 [44] Q&A Session Summary Question: Can you elaborate on the creative financing structures for TPO providers? - The company is in discussions with TPO customers to bring lease financing access to long-tail installers, aiming to prevent market erosion [50][52] Question: How do you plan to manage elevated microinverter inventories? - The company expects demand to increase due to the 25D credit, which will help normalize channel inventories by year-end [57][58] Question: What is the expected safe harbor revenue for Q3? - The Q3 revenue guidance does not include any safe harbor revenue, as the company is awaiting clarity from TPO partners [61][63] Question: What are the assumptions behind the expected 20% drop in TAM for 2026? - The company expects a shift in the market dynamics, with a decrease in cash and loan markets and a slight increase in leasing [66][67] Question: How quickly can the company implement strategies to maintain volume in a declining TAM environment? - The company does not anticipate significant changes in operating expenses as the strategies are aimed at maintaining demand without major cost increases [73][74]