Tigo Energy, Inc. ($TYGO)

Good afternoon. Welcome to Tigo Energy's Fiscal First Quarter 2026 Earnings Conference Call. [Operator Instructions] Joining us today, Tigo are Zvi Alon, CEO; and Bill Roeschlein, CFO. As a reminder, this call is being recorded. I would now like to turn the call over to Bill Roeschlein, Chief Financial Officer.

Thank you, operator, and it's a pleasure to join you today from our corporate offices in Los Gatos, California. Also with us is Zvi Alon, our CEO. We'd like to remind everyone that some of the matters we'll discuss on this call, including our expected business outlook, our ability to increase our revenues and our overall long-term growth prospects, expectations regarding a recovery in our industry, including the timing thereof, statements about demand for our products, our competitive position and market share, the impact of tariffs, our current and future inventory levels, charges and reserves and their impact on future financial results, inventory supply and its impact on our customer shipments, statements about our revenue and adjusted EBITDA and non-GAAP net loss for the second fiscal quarter 2026. And our revenue for the full fiscal year 2026, our ability to penetrate new markets and expand our market share, including expansion in international markets and investments in our product portfolio were all forward-looking statements and, as such, are subject to known and unknown risks and uncertainties including, but not limited to, those factors described in today's press release and discussed in the Risk Factors section of our most recent annual report on Form 10-K, our quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2026, and other reports we may file with the SEC from time to time. These risks and uncertainties may cause actual results to differ materially from those expressed on this call. Those forward-looking statements are made only as of the date when made. During our call today, we will reference certain non-GAAP financial measures. We include GAAP, non-GAAP to GAAP reconciliations in our press release furnished as an exhibit to our Form 8-K. The non-GAAP financial measures should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. Finally, I'd like to remind everyone that this conference call is being webcast and the recording will be made available for replay on Tigo's Investor Relations website at investors.tigoenergy.com. With that, I'd like to now turn the call over to Tigo's CEO, Zvi Alon. Zvi?

Thank you, Bill. To begin today's discussion, I will highlight key areas in our recent financial and operational performance before turning the call over to our CFO, Bill. He will discuss our financial results for the first quarter in more depth as well as provide our guidance for the second quarter of 2026, and full year of 2026. After that, I will share some closing remarks, tell you about the outlook and then open the call for questions from the analysts. Business update. We delivered a strong start to 2026 despite the typical weather-related seasonality in our end markets. To be more specific, in the first quarter of 2026, we reported a total revenue of $25.2 million, representing a 33.7% increase compared to the first quarter of 2025. By geography, we saw seasonally stronger performance on a year-over-year basis with the EMEA region during the quarter, which comprised 69.5% of our revenue. Recently, we also announced that our enhanced Tigo GO battery is now available in the European residential market and is expected to further strengthen our European presence with storage capacity up to 47.9 kilowatt hours and integrated heating for cold weather operations. Within Americas region, which comprised 20.9% of our revenue, we saw higher performance on a year-over-year basis, but lower results quarterly as the buyers accelerated purchases late last year, ahead of the expiration of residential clean energy tax credit. By country, we performed exceptionally well in Italy, which grew 140.8% sequentially, and again, in APAC, in Australia, which grew 64.3% compared to Q4. I would also like to highlight strong growth in the Czech Republic and Poland where an unusually cold weather patterns during Q4 has significantly impacted solar installations as mentioned in our last earnings call. These results were offset by seasonal softness in Germany and weaker results in the U.K. market were robust growth in 2025 moderated for us the current -- in the current quarter. As we look at the energy sector as a whole, Energy security is an increasingly important priority for governments, businesses and homeowners across the globe. The recent geopolitical developments in Iran continue to highlight importance of energy in independence worldwide, as energy markets remains volatile, we believe Tigo is well positioned to support installers, homeowners and commercial customers seeking flexible, reliable and intelligent solar and storage solutions. Finally, as we look forward towards the rest of the year, I would like to share 3 specific growth catalysts that I expect will drive accelerated growth for Tigo. First is our partnership with EG4, which is just now beginning to kick off with the first deliveries occurring this month. This partnership is expected to provide the U.S. market with an IRS 45X and IRS 48E ITC credit-qualified optimized inverter solutions. Second, in our new line of new GO ESS batteries for the U.S. and EMEA markets, this provides a compelling and complete solution for TPOs in the U.S. and addresses market requirements for additional storage capacity in EMEA region. And third is the positive activity we are seeing in our pipeline for large-scale utility deals, where we believe as a competitive advantage. And with that, I would like to turn it over to Bill. Bill?

Thank you, Zvi. Turning now to our financial results for the first quarter ended March 31, 2026. The Revenue for the first quarter of 2026 increased 33.7% to $25.2 million from $18.8 million in the prior year period. On a sequential basis, revenues decreased 16.1%, despite improved results coming from many countries in the EMEA region, including the Czech Republic, Italy and Spain. By region, EMEA revenue was $17.5 million or 69.5% of total revenues and a 3.2% sequential decrease. Americas revenue was $5.3 million or 20.9% of total revenues and a 43% sequential decrease. And APAC revenue was $2.4 million or 9.6% of total revenues and a 10.2% sequential decrease. By product family, for the first quarter of 2026, MLPE revenue represented $20.8 million of revenue or 82.4% of total revenues. GO ESS represented $4 million or 15.8% of total revenues and Predict+ represented $0.5 million or 1.8% of total revenues during the quarter. Gross profit for the first quarter of 2026 was $10.8 million or 42.8% of revenue compared to a gross profit of $7.2 million or 38.1% of revenue in the comparable year ago period. Improvement in gross margin is largely due to the absence of warranty-related charges in the most recent quarter compared to the year ago period. Operating expenses for the first quarter increased 18.4% to $13.2 million compared to $11.2 million in the prior year period. The increase was driven primarily by bad debt expense of $1 million as a result of the bankruptcy of a European distributor during the quarter. We do expect a portion of this amount to be recoverable through insurance in a future period. Operating loss for the first quarter [indiscernible] compared to an operating loss of $4 million in the prior year period. GAAP net loss for the first quarter was $1.8 million compared to a net loss of $7 million for the prior year period. Non-GAAP net loss, which we are introducing this quarter and reconciled from GAAP net loss solely by excluding stock-based compensation, totaled $0.1 million, compared to a non-GAAP net loss of $5.4 million in the prior year period. We believe this measure provides investors with additional insight into our progress for achieving consistent GAAP net income. Adjusted EBITDA loss for the first quarter decreased 76.8% to $0.5 million compared to an adjusted EBITDA loss of $2 million in the prior year period. As a reminder, adjusted EBITDA is a non-GAAP measure that represents net loss as adjusted for interest and other expenses, income tax expense, depreciation, amortization, stock-based compensation and M&A transaction expenses. Primary shares outstanding at the end of the quarter were $75.9 million. Turning to the balance sheet. Accounts receivable net increased this quarter to $14.2 million, compared to $13.9 million last quarter, and increased from $10.4 million in the year ago comparable period. Inventories net decreased by $6.5 million or 20.7% to $24.8 million compared to $31.3 million last quarter, and increased compared to $18.9 million in the year ago comparable period. Cash, cash equivalents and short and long-term marketable securities totaled $11.6 million at March 31, 2026. On a sequential basis, cash increased by $3.9 million as we successfully closed the registered direct offering of approximately $15 million during the quarter. In addition, we closed on a credit facility with Wells Fargo Bank at the end of the first quarter. The facility provides up to $10 million of availability based upon a borrowing-based formula consisting of certain accounts receivable and inventory held by the company. No drawdowns were taken during the first quarter. Turning now to our financial outlook for the second quarter of 2026 and full year of 2026. As a reminder, Tigo provides quarterly guidance for revenue as well as adjusted EBITDA, as we believe these metrics are key indicators for the overall performance of our business. For the second quarter of 2026, we expect revenues and adjusted EBITDA to be in the following range. We expect revenues in the second quarter ended June 30, 2026, to range between $30 million and $32 million. We expect adjusted EBITDA to range between $1 million and $3 million. For the full year of 2026, we continue to expect revenues to range between $130 million and $135 million. That completes my summary, and I'd like to now turn the call back over to Zvi for final remarks. Zvi?

Thanks, Bill. We are pleased with how we have started 2026 and the tractions we are seeing across our key markets. The continued predictability of our business reinforces our confidence in sustaining growth through the remainder of the year, and we expect to maintain our competitive outperformance. We entered the remainder of the year with a strong foundation and a clear path forward, and we are excited about the opportunities ahead. With that, operator, please open the call for Q&A.

[Operator Instructions] Our first question comes from the line of Philip Shen with ROTH Capital Partners.

I wanted to start with the potential for the EU to ban Chinese inverters. And I wanted to understand if you could be a beneficiary of that -- what have you learned about this? And how quickly could this ban become effective. It seems like it could be or may it be effective already. So are you seeing a change in the business at all already?

So we are aware of the change. It actually started, I would say, probably last year some time, and there are a couple of countries already that are banning Chinese-controlled monitoring systems and devices. And so we do believe that it would actually increase the market share for our solutions out there. And so we see it as a positive contributor for our solutions in the market. We have been touting the security of us being the U.S., and monitored in the U.S. solutions for quite some time. And that seems to be, obviously, working with those sentiments which are in the market in general.

Okay. Are you seeing a change in demand for your business because of this? Or is it hard to discern that the demand is coming from this?

It's hard to -- yes, right now, it's hard to actually say that it is correlated. In general, I can tell you that we've seen Europe starting to wake up towards the end of the quarter, the first quarter. And from that perspective, we are fairly confident it will continue. And that addition of the bending of Chinese will just accelerate it and help more. But I can tell you that our optimizers are doing exceptionally well in the -- what we see in the market.

Great. Can you elaborate more on that? I know you had a lot of volume, most of it from Europe in the quarter, that mix of, call it, 70% from EMEA or Europe. Do you think that mix stays similar through the rest of this year? And maybe give us a little bit more color on which countries are strong and maybe which countries have been less strong, but could become stronger ahead?

So we've been sort of trending in this -- these percentages for a little bit of time here, about 65%, 70% from EMEA, it was once higher than that. But the U.S. has really picked up steam for us. And with the repower initiatives that we've had and now with the introduction of our new hybrid inverter battery solution along with EG4 partnership for optimized inverters, we think that Europe -- the U.S. could be a market where we pick up a good share regardless of the macro condition there. So that might drive the EMEA region perhaps to be a little bit less than 7% by the time we get to the end of the year. We'll just have to see how that plays out. Within the European area, we've historically been strong in Italy, Germany, those being the 2 biggest economies of last year with the U.K. Germany has been by most accounts, big but sluggish. And I'd say we've had just -- we've had decent growth, but the areas where we've seen some really outsized growth that's really working in our favor, and I think it's going to work out this way in 2026 as well as the U.K. was really great because we came in with almost 0 market share and just quickly established a good revenue base coming into that country. And in -- we're making a concerned effort to go after more of the European -- Eastern European theater, where we talked about them on this call before, some competitors have withdrawn a bit or reduce their footprint. And so that's where Sylvania, Romania, Poland, even the Czech Republic, which again, we've been doing strong for a while now, but there's still additional market share to be picked up there. So we're sort of expanding beyond our traditional strength in Italy, Germany and going a little bit more east and north, if you will.

Great. You mentioned repowering. Can you give us some sense of how the success that you're having there? It sounds like this is a big opportunity. If you can quantify anything in terms of how much of your total revenue or total U.S. revenue that could be for '26, that could be very helpful.

Sure. So it more than doubled. It was about 23% of 2025. Most recently, it was 20%. Again, Zvi mentioned we did have a lot of -- we believe we had some pull-in orders related to the 25B expiration that kind of muddled the overall measurement of that, but we're still working with the same installers who are -- have a brisk book of business. And we, again, expect another year of growth coming from that side of the house. We have a very unique hybrid inverter that fits nicely. It's got the right form factor, it's got the right ability to accept both varying voltage levels and minimal amount of wiring rewiring required. So there's a lot of advantages to our solution that fits in well with repower. But really, I think you're going to now layer in our initiative with our GO ESS battery hybrid inverter for the year, along with EG4 and I think the U.S. market could be very, very strong growth for us this year.

And actually, on the rig power 1 additional point is that the model systems age, the better it is for us. We've been an early -- we've identified this market early and we've been playing for in it for quite some time and gaining quite nice momentum. So as it ages, it should be better for us.

Great. Okay. Last one for me. That sounds exciting. Let's move over to the utility scale solar opportunity, as Zvi, you mentioned, that there's a large pipeline of opportunity there. And so I'm guessing this is tied to Predict+, which is a software package that you guys have. I was wondering if this is also tied to your optimizer opportunity. So just give us a little more color on what that looks like and how that could drive 2026.

So yes, I did mention last time that we see an increase in activity in utility scale, and that continues. I don't want to make any pre-announcements which is not the right thing to do. But in general, we do see a momentum in both the Predict+ as well as the optimization. And on the optimization, I would -- I will add that we see two main drivers. One is obviously new installations. And we did mention the large installation in Spain, which is now operational up and running right next to the Madrid Airport, which we got late last year, it was 142 megawatts. And we see in the pipeline similar sized projects and a number of them. So we are fairly excited about it and optimistic.

Our next question comes an Eri Stine of Craigh-Hallum Capital Group.

So I know you talked about the EU, the outlook here in '26, but it was kind of more from a strategic point of view. I'm wondering if you can just dig in a little bit on the market improvement, people starting to talk about green shoots. You mentioned that you saw that towards the end of the quarter. I mean, where does that stand? I know that you mentioned at least in Q1 some softness in Germany and the U.K., and those are two countries where you are starting to see indications of that improvement. So when do you anticipate you might start to see the benefit from that? Is it Q2? It seems like it's not. That type of expectation is not necessarily part of your outlook. But when might you see it? And when do you become convinced that it is something that is sustainable market improvement?

Thanks, Eric. So we started seeing an improvement in the second part of Q1. The first part of Q1 was very sleepy to be honest, which is fine. That's normal. It's not like it was different. But despite the fact, we still have seen a 30% growth quarter-over-quarter, year-over-year. I believe that Q2, by the guidance we provided is also demonstrating a nice growth year-over-year. And obviously, it is based on some of the confidence we see in all regions, including Europe, which is the largest region we have. And so from our perspective, we do believe that we will continue to see market share gains -- and also, Bill mentioned that we expanded into Eastern Europe in some places where our competitors have left and we've seen some fairly good momentum. So Europe for us is actually showing some fairly good signs despite the fact that Germany was a little bit slow. I will highlight that we have seen Germany starting to get back to life in the second part of Q1, the same as what I've highlighted for Q1. So we are not quite sure they will get back to the same full strength of last year or more, but we have seen an improvement there, which is causing us to build a bit more optimistic. In addition, -- the -- my mention on the success in the utility scale projects, a good portion of them are in Europe. So we don't want to get into specificity right now, but this is a new area for us, which is based on the success in Spain we had and some new opportunities we've identified. And so we have actually fairly -- we believe fairly strong that Europe is going to be a very good place for us going -- moving forward.

Yes. Okay. That is helpful. And then, I guess, maybe sticking with utility scale. I know that you have talked about several times. You've got a number of opportunities. You've set the guidance in a spot that you believe is a good place to be. It's obviously very good growth. But you've also talked about these opportunities, whether it's GO ESS, EG4, that would mean potentially significant growth in '26. So I'm curious, I mean, where would you put utility scale in that? Is that something that you're starting to see good signs, but that's more of a 2027 event where it really starts to impact financials? Or is it something that potentially depending on timing could be more of a 2026 event?

So let me categorically be very clear. The increase in utility footprint is in 2026 and not the end of the year, and I will just leave it there. So it's, yes.

I would just add that we're -- we don't normally talk about pipeline, but the deals that we're working on are getting to the point where they are ripe for a decision. And so there's enough of those in our pipeline where we are at least finalists where we feel confident that we'll have something to talk about this year.

And that an yes, you have been following us for quite some time. So we generally are more conservative. We don't share.

Absolutely.

Our confidence is high.

Yes. That's why I'm asking. And so I mean I would just assume we should put this in the category along with those others that could mean upside to kind of what your view is now Okay. Maybe last one for me. This is just more clarification on the repowering. I know that the primary focus there is on the inverter side. But is that also something that potentially develops from an optimizer side as well as some of these older systems, as they upgrade and perhaps they decide they're 10 years old, and decide that they want that control at the panel level.

So it's an outstanding question, Eric. And so you just hit the name on the top. It actually gives us an access to 2 potential expansions. One is the optimizer, as you described it. And the second one, since all the solutions we provide with a hybrid inverter, adding a battery is very cost effective. So by virtue of increasing that market share with our solutions in the repower, it will give us an opportunity to sell additional batteries as well at a very cost-effective way compared to any other solution.

Our next question comes from the line of Sameer Joshi with H.C. Wainwright.

A lot of topics have been covered, but I don't think we've discussed enough the GO-ESS opportunity and traction. It seems that with $4-ish million in revenues, it is sort of high since 2023. Are you looking at the meaningful contribution from GO ESS during 2026? And is it a contributor to growth?

We believe that with our next generation that we have here, we expect that it will be widely accepted by the market. And the feature functionality, price point, et cetera, and size are all line up to what customers are asking for. And so both in the U.S. with new sales, TPO opportunities and even repower, which is a captive market for us to get battery revenue from. And then in Europe, we have got we've addressed and the market's desire for a larger storage capacity for both 3-phase and single-phase markets, especially in the 3-phase market. And so our new generation of battery has both the cold weather functionality, which is important in that market and ability expansion, ability up to almost 48 kilowatt hours. And so that's what the market has been asking for, and that's why we're excited about being able to introduce it now. So we expect '26 to be -- we expect to gain a lot of positive momentum out of both markets.

Understood. And then the second question is inventory was down quarter-over-quarter sequentially, $6.5 million down. Should we read anything into this? Or -- and then part 2 of that question is, how is the supply chain and how quickly can you rebuild this inventory, especially given traction or projections for the second -- or outlook for second half as well as the hinted progress on utility scale?

We're still in an 8-week factory to customer supply chain environment. So we're not seeing major hurdles there. We -- as a corporate metric, we try to keep 90 to 100 days of inventory. We were trending higher than that. So us bringing it down was just part of us trying to again run the working capital at an optimal level for us. And so we'll continue to do it that way. We have no problem meeting the utility, any big utility win the benefit of having an outsourced contract manufacturing business model allows you to scale up and down very quickly, and it's not very difficult to do. We've got the floor space to do it. We can add another line if and when we need to.

Understood. And then the last one, just a quick one. On operating expenses through the year, should we expect to see any marginal increases or do you have enough manpower and resources so that we won't see any meaningful increase in OpEx?

Yes. I think we're trending in that $12.5 million to $13 million range for the rest of the year. If I were to put a wider lens on it, 12.5% to 13.5%, so midpoint 13%, somewhere in there, we are able to grow this year without having to add a lot of OpEx demonstrating the leveragability in our operating model. So we've been at this level, around 13% for several quarters now. So I think that's the right ballpark for the rest of the year.

At this time, this concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Alon for closing remarks.

Thanks again, everyone, for joining us today. I especially want to thank our dedicated employees for their ongoing contributions as well as our customers and partners for their continued hard work. I also want to thank our investors for their continued support. Operator?

Thank you for joining us today for Tigo's First Quarter 2026 Earnings Conference Call. You may now disconnect.