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Enphase Energy Inc. (NASDAQ:ENPH)

This company has been moved to the archive! The financial data has not been updated since February 9, 2024.

Common-Size Income Statement

Enphase Energy Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net revenues 100.00 100.00 100.00 100.00 100.00
Cost of revenues -53.80 -58.19 -59.88 -55.32 -64.56
Gross profit 46.20% 41.81% 40.12% 44.68% 35.44%
Research and development -9.92 -7.24 -7.64 -7.22 -6.47
Sales and marketing -10.12 -9.23 -9.33 -6.83 -5.88
General and administrative -6.02 -6.01 -7.53 -6.55 -6.22
Restructuring and asset impairment charges -0.68 -0.10 0.00 0.00 -0.42
Operating expenses -26.74% -22.58% -24.50% -20.60% -18.98%
Income from operations 19.46% 19.23% 15.62% 24.07% 16.45%
Interest income 3.04 0.59 0.05 0.28 0.40
Interest expense -0.39 -0.40 -3.27 -2.71 -1.55
Other income (expense), net 0.28 -0.02 0.44 -0.10 -0.87
Loss on partial settlement of convertible notes 0.00 0.00 -4.09 -0.39 0.00
Change in fair value of derivatives 0.00 0.00 0.00 -5.73 0.00
Other income (expense), net 2.94% 0.16% -6.87% -8.66% -2.02%
Income before income taxes 22.40% 19.39% 8.75% 15.42% 14.43%
Income tax (provision) benefit -3.24 -2.35 1.77 1.88 11.38
Net income 19.16% 17.05% 10.52% 17.30% 25.81%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The financial performance from 2019 to 2023 is characterized by a general expansion of gross margins paired with an increase in strategic operating investments. While operating efficiency has remained resilient, the net income margin has experienced volatility driven by non-operating items and shifting tax positions.

Gross Profitability Trends
Gross profit margins demonstrate a consistent upward trajectory, rising from 35.44% in 2019 to 46.20% in 2023. This improvement indicates a significant reduction in the cost of revenues as a percentage of net sales, which dropped from 64.56% to 53.80% over the five-year period, suggesting enhanced production efficiency or pricing power.
Operating Expense Analysis
Operating expenses as a percentage of revenue have increased from 18.98% in 2019 to 26.74% in 2023. This growth is primarily driven by intensified spending in Research and Development, which rose from 6.47% to 9.92%, and Sales and Marketing, which increased from 5.88% to 10.12%. General and administrative expenses remained relatively stable, fluctuating between 6.01% and 7.53%.
Operating Income Performance
Income from operations has remained robust, ending the period at 19.46% in 2023, compared to 16.45% in 2019. Although a peak of 24.07% was reached in 2020, the overall trend reflects a balance where gross margin expansion has effectively offset the increase in operating expenditures.
Non-Operating Items and Financial Costs
Other income and expenses exhibited significant volatility between 2020 and 2021, largely due to losses on the partial settlement of convertible notes and changes in the fair value of derivatives. However, by 2023, this segment became a net positive contributor at 2.94%, heavily supported by a surge in interest income, which reached 3.04% of net revenues.
Net Income and Taxation
Net income margins decreased from a peak of 25.81% in 2019 to 19.16% in 2023. The high net income in 2019 was primarily influenced by a substantial income tax benefit of 11.38%. By 2022 and 2023, the company transitioned to a tax provision position, with expenses representing 2.35% and 3.24% of revenues, respectively, contributing to the moderation of the bottom-line margin.

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