Tigo Energy, Inc. Common Stock 2026 Q2 Earnings Call

Thank you, operator. 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 expected business outlook, our ability to increase our revenues and achieve, meet, and maintain profitability, our overall long-term growth prospects, expectations regarding a continued recovery in our industry, statements about demand for our products, our competitive position and market share, the impact of tariffs and other trade barriers, including U.S. restrictions on foreign-produced power inverters, the anticipated impact of regulatory actions, including actions by the FCC and the European Union on demand for our products, our current and our future inventory levels, charges and reserves, and their impact on future financial results, inventory supply and its impact on customer shipments, statements about our revenue, and adjusted EBITDA for the third fiscal quarter of 2026 and our revenue for the full fiscal year 2026.

The expected timing of the market introduction and volume ramp of our Section 25D and ITC-qualified optimized inverter solution. Our ability to penetrate new markets and expand our market share, including expansion in international markets and our continued expansion of, and investments in our product portfolio and the timing thereof, and our U.S. manufacturing strategy are all forward-looking 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 June 30th, 2026, and other reports as we may file with the SEC from time to time. These risks and uncertainties could 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 reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures in our press release, furnished as an exhibit on our Form 8-K. The non-GAAP financial measures provided should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Finally, I would like to remind everyone that this call is being webcast, and a 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 CEO, Zvi Alon.

Zvi? Thank you, Bill. To begin today's discussion, I will highlight key area of our recent financial operational performance before turning the call over to our CFO, Bill.

He will discuss our second quarter financial results in more depth and provide our guidance for the third quarter and revised outlook for the full year of 2026. After that, I will share some closing remarks and then open the call for questions from our analysts. Second quarter revenue grew 5.6% year-over-year to $25.4 million, came in below our expectations. Results were below our prior guidance and the variance was primarily driven by external timing factors and current market conditions. To put that in context, we grew overall revenue year-over-year in a quarter when residential solar contracted in many of the markets that we serve.

In the U.S., Q2 residential volumes contracted to post a 25D, in line with the Wood Mackenzie annual expectation of 21% decline, Italy and Czech residential installations both declined double digits, respectively. In the first half, residential installations in Germany, meanwhile, are recovering off a 21% decline in Q1 of 2026, according to the German Solar Association. In the United States, sales were down 4% year-over-year following the expiration of the Residential Clean Energy Credit. In addition, our U.S. optimized inverter partner encountered operational delays that will shift the timeline of market introduction of our Section 45X and ITC-qualified optimized inverter solution, with volume shipments now expected to begin ramping up in the fourth quarter.

This timing shift will delay the near-term contribution, the FCC's recent decision to restrict future authorization of foreign-produced power inverters strengthens the strategic relationship of our U.S. manufacturing strategy and positions our Section 45X and ITC-qualified optimized inverter solutions to meet the growing demand for domestically produced solar products. In Europe, the market recovery continues at a more measured pace than anticipated. Similar to the U.S. market, the European Union restriction on inverters from high-risk vendors in EU-funded projects is directing demand towards trusted vendors in countries where Tigo is already strong, including Czech Republic and Poland. We believe Tigo is one of the few companies in the solar industry positioned to benefit from both of these policy actions. Encouragingly, Germany and Italy grew 6% and 20% year-over-year, respectively. Weakness in both residential markets.

We have delivered year-over-year growth in Spain, Australia, demonstrating the benefits of our diversified geographic footprint. In Germany, specifically, the cabinet approved changes in July that would fix the feed-in tariff for new systems beginning in 2027. While systems connected to the grid by the end of this year keep their existing terms. We believe this should pull demand into the second half of 2026 and raise the value of the storage and self-consumption, which is what our MLPE and storage products are designed to deliver. Within our product portfolio, GO ESS contributed $2.2 million or 8.6% of the quarterly revenue as the ramp of our new GO Battery progressed more slowly than planned. In summary, we remain focused on advancing our product initiatives, expanding partner relationships, aligning our cost structure with near-term demand, and maintaining close control of working capital.

These priorities are central to capitalizing on the broader international opportunities and driving more consistent growth and sustainable profitability. With that, I will turn it over to Bill.

Bill? Thank you, Zvi. Turning now to our financial results for the second quarter ended June 30, 2026.

Revenue for the second quarter of 2026 increased 5.6% to $25.4 million from $24.1 million in the prior year period. On a sequential basis, revenue increased 0.8% from $25.2 million in the first quarter. By region, EMEA represented 73.1% of total revenue, APAC represented 10.1%, and the Americas and LATAM represented a combined 16.8%. By product family, for the second quarter of 2026, MLPE revenue represented $22.7 million of revenue or 89.2% of total revenues. GO ESS revenue was $2.2 million, representing 8.6% of total second quarter revenue, and EI Platform revenue represented $0.6 million or 2.2% of total revenues during the quarter, with Predict+ annual recurring revenue reaching $1.7 million at quarter end.

Gross profit in the second quarter was $10 million or 39.3% of revenue, compared with a gross profit of $10.8 million or 44.7% of revenue in the comparable year-ago period. Excluding GO ESS, gross margin was 42.1%, with the difference primarily attributable to the sale of our remaining stock of older EI batteries. Operating expenses for the second quarter decreased 4.8% to $11.7 million from $12.3 million in the prior year period and decreased 11.6% sequentially. We remain focused on disciplined expense management throughout the quarter. Operating loss for the second quarter was $1.7 million, compared with an operating loss of $1.5 million in the prior year period. GAAP net income for the second quarter was $2.2 million, compared with a GAAP net loss of $4.4 million in the prior year period. Second quarter net income included a $3.2 million income tax benefit.