Good day, ladies and gentlemen, and welcome to Enphase Energy’s First Quarter 2014 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Bob Dentzman, Treasurer of Enphase Energy. Mr. Dentzman, you may begin.

Thank you. Good afternoon, and thank you for joining us on today’s conference call to discuss Enphase Energy’s fiscal first quarter results for the period ending March 31, 2014. This call is also being broadcast live over the web, and it can be accessed in the Investors section of Enphase Energy’s website at www.enphase.com. On today’s call are Paul Nahi, Enphase Energy’s Chief Executive Officer, and Kris Sennesael, Chief Financial Officer. After the market closed today, Enphase issued a press release announcing the results for its fiscal first quarter ended March 31, 2014 by providing accompanying presentation with our earnings call that you can access on Investors section of the company’s website. During the course of this conference call, Enphase’s management will make forward-looking statements, including but not limited to, statements related to Enphase Energy’s financial performance, market demands for its microinverters, advantages of its technology, market trends and future financial performance. These forward-looking statements are based on the company’s current expectations and inherently involve significant risks and uncertainties. Enphase Energy’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties. Factors that could cause results to be different from these statements include, factors that company describes in its press release of today, especially under the section entitled forward-looking statements, as well as those detailed in the section entitled Risk Factors of the company’s reports on Form 10-K for the quarter ended December 31, 2013. Copies of these documents may be obtained from the SEC or by visiting the Investors section of the company’s website. Enphase Energy cautions you not to place undue reliance on forward-looking statements and undertakes no obligations to update any forward-looking statements as a result of new information, future events or changes in expectations. Also, please note that certain financial measures used on this call are expressed on a non-GAAP basis and have been adjusted to exclude certain charges. The company has provided reconciliations of these non-GAAP financial measures to GAAP financial measures in its earnings release posted today, which could also be found in the Investor Relations section of its website. And now, I would like to introduce Paul Nahi, Chief Executive Officer of Enphase Energy. Paul?

Good afternoon, and thank you for joining us today to discuss our first quarter 2014 financial results. We’re going to follow our usual format. I’ll start with my opening remarks and touch on key highlights for the quarter. Kris will go over the financials and business outlook, and then we’ll open up the call to Q&A. Enphase is off to a great start in 2014. By leveraging the business momentum upon entering the year and executing well on our global business strategy, we were able to deliver record first quarter results. Our revenue of $57.6 million, up 26% year-over-year was the highest for any first quarter in our company history and exceeded the top end of our financial outlook. In addition, we shipped 93 megawatts, which was an increase of 37% year-over-year. Demand was strong in our core North American residential markets, despite the severe weather conditions in Canada and the Northeastern United States. On the international front, our geographic expansion continues to go very well, as revenue in Europe and Australia was up 41% on a year-over-year basis. We’re pleased to see the meaningful top line contributions from our international expansion efforts. During the first quarter of 2014, we completed the initial resourcing of our Australian office, and recently announced the opening of our Melbourne headquarters, along with the appointment of our new General Manager for the Asia-Pacific region. We now have a solid beachhead to address the very promising Australian market, and we’ll use it as a springboard to address other opportunities in the region as well. Last month, I was in Australia and New Zealand as part of our media tour announcing Enphase’s increased presence and investment in the APAC region, along with our long-term commitment to these markets. To-date, we’ve received a great deal of positive…

Thank you, Paul. First, I will start by providing some more detail on the financial results for the first quarter of 2014, and then I will turn to the business outlook and touch on the shelf registration we filed yesterday. As a reminder, the financial measures that I am going to provide are on a non-GAAP basis unless otherwise noted. During the first quarter, we saw strong business momentum that started in the fourth quarter of 2013 and has continued into the first and second quarters of 2014. Total revenue for the first quarter of 2014 was $57.6 million, beating the high-end of our revenue outlook of $54 million to $57 million that we provided during the previous earnings call. Revenue for the first quarter of 2014 increased 26%, compared to the first quarter of 2013. On a sequential basis, revenue was down only 14% from the fourth quarter of 2013, which is much better than the 20% to 25% seasonal decline that we have historical experienced during the first quarter of each year. This year we are seeing the impact of strong overall demand for solar in our core markets, as well as growing demand for Enphase microinverter systems and increasing contribution from our global expansion. We shipped 93 megawatts AC or approximately 107 megawatts DC during the first quarter of 2014, which is an increase of 37% on a year-over-year basis. The 93 megawatts shipped represents approximately 423,000 microinverters, of which, over 70% was our fourth generation microinverter systems, which includes the M250 and the M215 with Integrated Ground functionality. As Paul mentioned, first quarter demand was strong in the U.S. residential markets and across all geographies, except for Canada and the Northeast of the United States, which were down substantially on a year-over-year and sequential basis due…

Thank you. (Operator Instructions) Our first question is from Philip Shen with ROTH Capital. Your line is open. Philip Shen – ROTH Capital Partners: Hi guys, thanks for taking my questions.

Sure. Philip Shen – ROTH Capital Partners: I’d like to start off with the U.K. market. It seems like it was a great market for you in the quarter, and the market overall is doing quite well. You talked about your current market share being at 7%. How do you expect that market share to trend over the year, and can you comment on the overall market dynamics in the U.K. overall and how you’re positioned?

Sure. So we have been in the U.K. market for a relatively short period of time. And obviously you can see by our market share growth that the value proposition of the Enphase microinverter system has certainly resonated there. I think its resonating there for the same reason it resonates in the U.S., which is that we provide a better return on investment for the owner and we provide a more efficient, more profitable business for the installer. We do have a very well established team there that’s functioning extremely well. We expect the U.K. market to continue to grow. The dynamics there – the regulatory dynamics as well as the overall economic conditions are very positive. So we’re expecting that to continue to trend well. We’re not going to comment obviously on our market share position going forward, but I think if you look at the dynamics in general, it bodes very well for Enphase. Philip Shen – ROTH Capital Partners: Okay, great. And in your PowerPoint deck I think you have the overall mix of gen four systems in 70%. Can you break out what it was for the M250 specifically, and how you expect that mix to change and trend over the year?

Well, so the M250, the higher power inverter was approximately 20% of total units shipped. This is still relatively low number, mainly driven by the fact that the availability of higher power modules is very limited. And so we do expect overtime that the availability of the higher power modules will increase and so also our share of the M250 and the overall units shipped will further increase, but that will take multiple quarters going forward. Philip Shen – ROTH Capital Partners: Great, thanks Kris. One more if I may, and then I’ll jump back in queue. There are a number of financing options available for homeowners to install solar in the U.S. How do you see PACE developments fitting to the overall mix on installations throughout the year? And over the long run, how do you expect PACE share to trend?

So that’s a great question. What we’re seeing right now which is very interesting is the proliferation of multiple types of financing vehicles that allows us, that allows the solar industry to reach more and more homeowners. PACE is a very interesting and a very powerful vehicle that allows the homeowner to apply the cost of solar to their property tax and get them tax deduction as well, the interest tax deduction on that as well, as well as amortizing the cost over 20 years. The PACE programs in California are going extremely well. As I mentioned in the call earlier, we talked about the fact that it’s in fact expanding into yet again more counties in California. And the fact is that PACE is actually enacted in I think approximately 10 states across the U.S. right now. So I think as the solar industry matures, we’re going to see more and more financing vehicles, whether its loans, whether its PACE and even some more yet to be built, that are going to allow solar to reach more and more households across a broader economic range. Philip Shen – ROTH Capital Partners: Great. Thanks, Paul. I’ll jump back in the queue.

Great. Thank you.

Thank you. And our next question is from Krish Sankar with Bank of America. Your line is open. Krish Sankar – Bank of America Merrill Lynch: Yes, hi. Thanks for taking my question. I had a couple of them. Number one, Paul, you articulated your international growth and your market share there. Kind of curious what do you think your market share is here in your home-based and along the same side, the trends that you’re seeing in markets like California and Arizona that are actually revising the net metering legislation?

So our growth in the U.S., we believe to be somewhere in the neighborhood of 40% of 50% of the North American U.S. residential markets. We’ve been fairly consistent there for the past couple of quarters. We have been attracting more and more installers. We’ve been working with more and financing partners. So I feel very good about our continued growth and the path in the U.S. In reference to some challenges to net metering, I think we’re going to see those challenges not just in California and Arizona but other states as well. However, the solar industry has tremendous momentum right now. And I think despite some of the challenges that the utilities are going to face in adopting a higher and higher degree of density of solar, we are going to find ways to work with these abilities to built business models that makes sense for both classes of companies. I don’t see in the short-term any material effect with these changes. Over time, it’s going to take a lot more negotiating at discussions, but I think the solar industry has done a good job in spearheading a lot of those discussions to-date. And I think we’re going to continue to do so. Krish Sankar – Bank of America Merrill Lynch: Got it. And that’s very helpful. And then just quickly, I know you guys don’t give a full-year outlook, but is it fair to assume that your international revenue this year should be significantly higher than 2013?

Again, we’re not giving specific guidance. I think that if you look at the progress that we’ve made in the international market, the success we’ve had of both in communicating the value proposition as well as really outstanding execution in multiple markets, I think it’s fair to assume that overtime, our total share of revenue will become greater and greater from the international markets. How soon that occurs? It’s going to depend on many different factors including the growth in the U.S. market. So I would say that our prospects internationally have never been brighter, but I am not going to comment on the specific timing. Krish Sankar – Bank of America Merrill Lynch: Got it. Fair enough. And then a final question for Kris. The OpEx going up 2 to 5 points and just kind of curious, how do you think about the split between R&D and SG&A? Is there more of a focus on R&D, given new product inclusive or is it just more SG&A leveling up as the sales goes up?

No. It is an even split I would say between R&D and sales and marketing. We keep G&A relatively flat, but we definitely continue to invest in R&D and sales and marketing. R&D is of course very important as we want to continue to bring out new products and continue to work on driving down the profit cost, that’s definitely a key item and we’ll continue to invest in that. And then of course sales and marketing, especially in support of our international expansion. We’ll have 2% to 5% sequential increase. I think it’s very important, if you look at top line growth, where in Q1 we did 26%, in Q2 at the midpoint of the guidance we’re at 22%. We definitely want to continue to grow our top line and accelerate to grow the top line. And in order to do that, we will have to continue to invest in our operating expenses and support that, while at the same time of course driving leverage in the model. As you can see, we have build the increases we have in operating expenses that the rate of increase is much more than the rate of the increase in the top line. And so as such, we are driving leverage in the model. Krish Sankar – Bank of America Merrill Lynch: Got it. Thank you very much guys. Thank you.

Thank you. Our next question is from Vishal Shah with Deutsche Bank. Your line is open. Jerimiah Booream-Phelps – Deutsche Bank: Hi guys, this is Jerimiah on the line for Vishal. Thanks for taking my question and congratulations on the progress you’ve made.

Thank you. Jerimiah Booream-Phelps – Deutsche Bank: I just wanted to touch on potential profitability outlook. Obviously no full guidance, but I think you guys are in breaking distance. Do you have any kind of way of thinking about that in terms of the timeframe there? Could we see that over the next couple of quarters potentially?

So as you’ll probably remember in Q4 of 2013, we had our first profitable quarter from a non-GAAP operating income point of view and we were definitely very excited about that. In Q1, we are getting back to a quarter in which we have a loss, but Q1 is seasonally softer quarter. And we were down 40% on the revenue line sequentially, mainly because of it’s a soft first seasonal quarter. Going forward, when you look at the guidance, Q1, we guide for very strong top line growth. And there is still a range out there, right, from $69 million from $73 million with gross margin at 30% to 33% and operating expenses up 2% to 5%. But when you do the math, at the high-end of the guidance, we have a shorter profitability in the second quarter. Again, it will depend on where the actuals come out vis-à-vis the guidance that we provided here. And as we continue to grow the top line in the second half of the year and depending on what’s happening from a margin point of view, we definitely are committed to further drive gross margins, but there is a lot of elements that go into the equation there for gross margin to this pricing and pricing pressure, and we will continue to drive down our product costs with some modest increases in operating expenses to support the current and future growth of the company. I do think we have the right mix there to continue to drive towards profitability. Jerimiah Booream-Phelps – Deutsche Bank: Okay, great. Yes, it sounds like you can get there pretty sustainably in the future. And on that note, as the international market expands, maybe could you just touch on the dynamics there and how that might be affecting your margins, both from an overall perspective and also as you’re entering the new markets?

Sure. So the margin picture is very complex. It involves different products, product mixes, geographies, different market segments. So it’s very hard for me to provide sort of guidance by one particular geography or by one particular market segment. What I would say just in general is that the high technology business model that we have, it’s very semi-conductor focused. That allows us to apply R&D to further reduce our costs, and has given us a great deal of confidence that we’re going to be able to continuously reduce our costs and stay ahead of the price reduction. Having said that, whether or not it happens on the same quarter, that we’ve always said that’s really not something we can predict, but over the long-term we’re feeling very good about it. So in general, we have seen in the past, anywhere between 6% and 14% ASP reductions year-on-year, and we’ve been able to keep pace with that with yet again more in cost reductions. And we feel confident that over the long run, we’re going to be able to maintain that trend. Jerimiah Booream-Phelps – Deutsche Bank: Okay, thanks. That’s helpful. And just one last quick question. Do you have any specific plans to enter some of the big markets internationally such as Japan, Germany or Italy?

The short answer to that is yes. We absolute plan to expand into the rest of Continental Europe. We are in active discussions with several potential partners for Japan. We’re investigating the Japanese regulatory environment as well. We have, as Kris has mentioned before, really embarked upon a path of profitable growth, which means we have to be careful about not letting OpEx get too far ahead of growth, but having said that, we have been very, I think aggressive in our international expansions to-date and we’re going to continue that same level of expansion into yet again new countries, again both in Europe and outside. Jerimiah Booream-Phelps – Deutsche Bank: Thanks guys.

Thank you.

Thank you. Our next question is from Timothy Radcliff with Morgan Stanley. Your line is open. Timothy Radcliff – Morgan Stanley: Hi guys. Thanks for taking the question. I just had a couple quick ones on your customer mix. So, the first one is in terms of the mix of customers and specifically installers versus third-party tech leasing players. Can you talk about how much of your capacity today is going towards the former versus later?

So we don’t break out the specifics there. What I would say just in general is that we are working with almost every significant financing partner in the U.S. right now. The value proposition is working very well with that. We’re continuing to add new partners all the time. We talked about HERO and PACE. And there are yet again new forms of financing that are going to be coming online that we should be able to talk about in the near future as well. So, well, again I can’t break out the specifics. I can’t say that our progress in the financing market is going extremely well. Timothy Radcliff – Morgan Stanley: Great. And then as a follow-up, can you maybe talk about your share within some of your top customers and kind of the outlook for that share? I know at the time of the IPO you talked fair amount about some customers that will use so much Enphase product, that they were using it exclusively. Are all of those relationships still intact, and then maybe with regards to some of the other customers that maybe don’t use the Enphase 100% but they represented a large amount of your volume, how are those relationships going?

In general, I’d say that the relationships that we’ve had remain intact that we’re seeing some of our very large customers are expanding and continuing to use Enphase. Some are 100% Enphase, some are less so, some will make decisions for supply issues. It’s very hard to sort of talk about the customer base in general, because each of our customers has a very different business model and a different way of approaching it. But our relationships with certainly all of our major customers, and I’d say the vast majority of our customers in general is stronger than it’s ever been and remains a very powerful portion of our value proposition. Timothy Radcliff – Morgan Stanley: Great. Thank you for the info, and congrats on the strong quarter.

Thanks very much.

Thank you. And our next question is from Pavel Molchanov with Raymond James. Your line is open. Pavel Molchanov – Raymond James: Hi guys. You know me. I ask this question at every earnings call. Competitive landscape, Power-One, SMA, any startups popping up that are giving you guys any headaches?

So if you’re referring to the competitive microinverter landscape, the answer is no. Although Power-One, ABB and SMA and other competitors have their micros that have been actively marketing them for sometime now. They just haven’t received any significant traction. Having said that and as we said on I think just right every call as well is that given this wholesale shift to microinverters, and we’re seeing that in every country we’re going to and we’ve already talked about why that’s occurring, the value proposition that’s accelerating that, there is no question that we will eventually see it, whether it’s their second, third or fourth generation product, we certainly overtime expect to see it, which is why we continuously invest in R&D, which is why we are staying ahead of the technology curve on microinverters, on software, on services and a broad array of products. But having said that, as of today, we’re not seeing any meaningful competition. The competition that we’re seeing really is primarily coming from traditional string inverters. Pavel Molchanov – Raymond James: Okay, understood. And pricing for either your specific product mix or I guess, how should we think about that heading into the, maybe next six to 12 months?

So we don’t forward announce any pricing as I said in the past. And in fact I said on this call, on average, if you look historically, we’ve reduced our pricing anywhere between probably call it 6% and 14% per annum. We have been able to maintain a cost reduction ahead of that. So you’ve seen a gross margin expansion, but again we don’t give any forward pricing, but we think that our ability to continuously reduce our price and reduce our cost provide a better value to the installer and provide a better value to consumer will continue unabatedly. Pavel Molchanov – Raymond James: Okay. I appreciate it guys.

Thank you.

Thank you. (Operator Instructions) Our next question is from Paul Strigler with Esplanade. Your line is open. Paul Strigler – Esplanade Capital: Hi guys. Couple of quick ones. One, it looks like despite sort of your 6% to 14% guidance for ASP declines, prices are hanging in there pretty well, at least if I do the quick math. Is there anything we should know about that’s sort of supporting pricing? It looks like it was only down, what like, 1% or 2% Q-over-Q. Is it gen four mix or is it just demand in supporting the current pricing?

So just to clarify one thing, the 6% to 14% is actually not guidance. That’s all historical. Paul Strigler – Esplanade Capital: Understood.

Yes. But in reference to your question, it’s a combination. We’ve been able to continue our path of cost reduction. The value proposition is resonating. We’ve been able to maintain a relatively stable ASP, the product mix, the geographies have been in our favor. Again – and I think we’re very proud of what we’ve done so far, and I think it’s been – the results have been outstanding. But having said that, going forward, you may see a quarter or two where there are variations in gross margins, because we can’t time the cost reduction to the price reduction, but the overall trend which you’ve seen over the past number of years, again we feel confident will continue. Paul Strigler – Esplanade Capital: Great. And then just a question on the U.S. trade case. Are you guys seeing from any of your partners sort of an acceleration of projects in Q2 before the June, and I think [indiscernible] gotten delayed till July, but any acceleration of projects or shipments for you guys into Q2 ahead of the trade case or it’s sort of – all sort of status quo is persisting?

I’d say in general, it’s more status quo than not. We have heard of some incidences where some things have been expedited, but I think for the most part we haven’t seen any significant change in demand related to the trade case. Paul Strigler – Esplanade Capital: Great. And then one last question. So some of the Hawaiian markets, so it looks like the Public Utilities Commission there is finally going to make HECO actually – that project proceed on a regular basis now. When do you guys sort of expect that to I guess turn into more shipments in the Hawaiian market? I know they’ve been sort of stalling a lot of folks with these interconnection studies, but it looks like that’s going to be sort of – that’s going to subside a little bit at least it sounds like?

So we’re actually very close with HECO. We’re working with them on several issues right now. And again it’d be very hard to predict when they decide to make any particular change. What we’re working with them on is our ways to help them stabilize their grid with the concentration of solar that they have. So a lot of technologies that are required to make this happen, we have several programs ongoing with them as we speak. I believe that HECO has very much the right intention. They are wrestling with sort of the dynamics of their existing grid and the advent of solar on that grid, but I’m optimistic that in the long-term we’re going to get through a lot of these technical issues and Hawaii will resume a very rapid growth. Paul Strigler – Esplanade Capital: Great. Thanks guys. Great quarter.

Thank you.

Thank you. And our next question is from Colin Rusch with Northland Capital. Your line is open. Colin Rusch – Northland Securities: Thanks guys. As you’re looking at the diversity of markets, you’re making some good headway in the U.K. as well as in Australia. Can you give us an update on, where you’re at with Japan and how do you see the back half of the year playing out in EMEA?

Sure. So I’ll address Japan first. As I had mentioned a bit earlier, we are, and will continue to be very active in our global expansion. What we have seen over the past 12 to 18 months is that the value proposition of an Enphase microinverter system really doesn’t change depending on the geography that you’re in, being able to provide a better return on investment for the owner of the system, being able to provide a simpler and easier design and installation methodology resonates. Japan is a very challenging market for an American company to break into. We know that. A lot of us on the executive team have had experienced working in Japan. So we’re doing the right thing, which is working with right now potential partners to find out that right engagement that will help accelerate our instruments into the Japanese solar market. And we’re working with the appropriate regulatory agencies, JET and others, to make sure that we abide by any of the local rules required for microinverter systems. I am confident long-term that we’re going to be a big player in the Japanese market. Given some of the challenges there, it’s a little bit harder to predict when that’s going to happen, but there is a lot of work with Enphase to make that happen as quickly as possible. In terms of the rest of Continental Europe, we certainly recognize that Germany and Italy are very big markets. And again we don’t preannounce the launch of a particular geography before it happens, but having said that, we have been very clear that we expect to be in every significant solar country across the world over time. And we’re going to do it in a way that continues our profitable growth strategy. Colin Rusch – Northland Securities: And can you talk about the dynamics around monetizing the grid stability and the communications functionality that you guys have? It seems to me that the lot of value that you’re providing that you’re not necessarily monetizing with some parties just...

It’s needed and wanted [ph] by multiple constituents. Putting in a format that makes sense, finding a business model that makes sense, it may take a little bit of time, but we do believe that every day, as we collect 400 gigabytes of data every day, we’re adding to a database that will absolutely be able to help utilities stabilize the grid and know what’s happening in any particular area. And hopefully that will also provide an easier way for more and more concentration of solar as well. Colin Rusch – Northland Securities: Great. I’ll take the rest of it offline. Thanks so much, Paul.

Thank you.

Thank you. (Operator Instructions) Just one moment while we wait for questions. All right, I’m not showing any further questions at this time. Please proceed with any closing remarks.

Thank you all for joining our call. 2014 is off to a great start. We’re encouraged by the positive industry outlook for the balance of the year and believe this outlook reflects the improving dynamics for the global solar industry as the true economics of solar power are becoming more fully appreciated. We remain bullish on the industry and are confident in Enphase’s ability as an industry leader to create shareholder value. Thank you. And we look forward to speaking with you again next quarter.

Thank you. Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. And you may all disconnect. Everyone have a great day.