Good day, ladies and gentlemen, and welcome to your Enphase Energy’s Second Quarter 2014 Financial Results Conference Call. At this time, all participants will be in a listen-only mode. But later there will be a chance to ask questions, and instructions will be given at that time (Operator Instructions). And as a reminder, today’s conference is being recorded. And now, I would like to turn it over to your host, Christina Carrabino.

Good afternoon and thank you for joining us on today’s conference call to discuss Enphase Energy’s second quarter results for the period ended June 30, 2014. This call is also being broadcast live over the Web, and can be accessed in the Investors section of Enphase Energy’s Web-site 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 second quarter ended June 30, 2014. We are providing an accompanying presentation with our earnings call that you can access in the Investors section of our Company’s Web-site. During the course of this conference call, Enphase 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 report on Form 10-K for the year-ended December 31, 2013. Copies of these documents may be obtained from the SEC or by visiting the Investors section of the Company’s Web-site. Enphase Energy cautions you not to place undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in its 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 can also be found in the Investor Relations section of its Web-site. Now, I would like to introduce Paul Nahi, Chief Executive Officer of Enphase Energy. Paul?

Good afternoon, and thanks for joining us today to discuss our second quarter 2014 financial results. As usual, I’ll start with my opening remarks and touch on some key highlights for the quarter and then Kris will take us through the second quarter financials and outlook for the third quarter. After that, we will open up the call for Q&A. We are very happy with our financial results for the second quarter of 2014. We reported record revenue of $82 million, an increase of 41% year-over-year and up 42% sequentially. This top-line performance was mainly driven by surging demand and strong business momentum in our core U.S. residential market, where Enphase is the leading inverter Company as well market share gains in the residential and commercial solar markets in the UK and Australia. The non-GAAP gross margin for the second quarter was also a Company record at 33%, representing a 490 basis point improvement over the second quarter of 2013. The combination of accelerated top-line growth and further gross margin expansion resulted in another quarter of positive non-GAAP operating income for Enphase. Kris will review the fine points regarding our second quarter financial results, but I will say that I am extremely pleased with our continued progress and momentum. The second quarter’s financial results reflect the growing demand for Enphase microinverter systems and our ability to execute on the key initiatives critical to our success. These key initiatives include, providing superior technology, reducing system costs, growing market share, expanding our geographic presence and continuing to chart our path to profitability and sustainable positive cash flows. I am pleased to share tangible evidence of the progress we’re making in these areas, and I am very proud of the entire Enphase team for their continued hard work and dedication. During the second…

Thank you, Paul. First, I will start by providing some more detail on the financial results for the second quarter of 2014, and then I will turn to the business outlook. As a reminder, the financial measures that I am going to provide are on a non-GAAP basis, unless otherwise noted. During the second quarter, we saw explosive growth in the solar market, resulting in accelerated demand for Enphase microinverter systems. Total revenue for the second quarter of 2014 was $82 million, exceeding the high-end of our revenue outlook of $69 million to $73 million that we provided last quarter. Revenue for the second quarter of 2014 increased 41%, compared to the second quarter of 2013. On a sequential basis, revenue was up 42% from the first quarter of 2014. As Paul mentioned, the large year-over-year and sequential revenue growth was driven by strong overall demand for solar in our core U.S. residential markets as well as growing demand for Enphase microinverter systems and increased contributions from our international markets, including the UK and Australia. We shipped 132 megawatts AC or a 152 megawatt DC during the second quarter of 2014, which is an increase of 54% on a year-over-year basis. The 132 megawatt shipped represents approximately 598,000 microinverters, of which, over 85% was our fourth-generation microinverter systems. We have now completed the switch to the fourth-generation system in U.S. and started the transition process in Europe and Australia as well. The U.S. market accounted for 85% of our total revenue in the second quarter, while international revenue was approximately 15% of total revenue. We saw a nice growth in the international markets, especially in UK and Australia, but currently our business in the U.S. driven by the strong business momentum in the residential markets, is growing slightly faster than…

(Operator Instructions) So we’ll take our first from Philip Shen from ROTH Capital Partners. Phil, please go ahead.

So you guys provided some great Q3 guidance. What are you seeing Q4 and how do you see it evolving given your discussions with your customers today?

Well Phil, as you know, we only provide one-quarter at a time guidance. So I’m not really going to provide guidance here for the fourth quarter. Having said that just in general, if you look at the last couple of years and at the normal seasonal trends, we have seen anywhere -- fourth quarter is kind of a flattish quarter in terms of sequential growth compared to the third quarter, sometimes that has down 5% sequentially sometime it has been up 5% sequentially. And again I’m not providing any specific guidance for the fourth quarter, but that’s a normal seasonal trend.

Okay, great. And this one is for Paul, thank you Kris. Paul, can you walk us through your vision of how Enphase shapes involved solar financing, what is your view of how the no money down loan, for example, shapes the demand in the industry as we go forward here?

Sure. Well, I think it’s important to remember is that first of all, Enphase is completely neutral as to the forms of financing. We encourage all forms of financing available and are encouraged by the different unique and creative products that are out there. One of the advantages of an Enphase system is that we provide more energy for the owner of the system, so whether it’s a residential owner or a leased owner, the return on investment is simply going to be better with Enphase. The other advantage of Enphase system as it relates to alternative forms of financing, let’s say, non-leased or PPA forms of financing, is that the O&M, the operations and maintenance, associated with Enphase is much lower than it would be with a traditional inverter. As a result, it’s well within reach of a lot more people. As an example, the most recent announcement we made or one of the most recent announcements we made with Mosaic, included EES or Enphase Energy Services, which is where we will actually provide the support, the O&M, support for the customer. But our view, our long-term view, and this is true not just domestically but internationally, is that we will see a variety of financing options and they will likely change post the ITC expiration and what’s important for us is to make sure that we support each and every kind to make sure that our customers have every options available to them.

Great. One more and I’ll jump back in queue. Changing gears to the international exposure that you have. Can you talk about the market share that you had in UK and Australia in the quarter?

So, it’s too early for us to talk about specific market share numbers in those countries. What I can say is that they are increasing. We feel very good about the progress we’re making in terms of market share, in terms of brand recognition, in terms of our reach towards installers and distributors. What’s becoming very clear is that the value proposition that is resonating so well in the United States resonates equally with customers in the APAC region or the EMEA region. So, we remain more confident than ever of our ability to succeed and perform in these countries.

Okay, thank you. And we’ll take our next question coming from Colin Rusch from Northland Capital. So Colin, please go ahead.

Could you walk us through what’s going on with these accrued liabilities, it’s a pretty big jump there. Could you also give some detail on what’s happening there as well as with accounts receivable growing so much quarter-over-quarter?

So first on the accrued liabilities, as you can see our operating expense came in at $27 million, that included some catch up on incentive accruals that end up in the accrual line. I think that was driving most of the increase there. In terms of receivables, obviously our top line was up 42% sequentially. That of course results in a higher receivable balance as well it’s slightly more than the 42% sequentially the receivables, some of the sales was in the second half of the quarter as the business continued to grow. We don’t see any collection issues with our one class customers that we have. So I think it’s part of growing so fast. We will have to continue to invest in working capital going forward.

And then as you’ve continued to invest in R&D and the platform. Can you talk a little about what you are expecting to see come out of those efforts and spend obviously 20% on that R&D spend. Can you talk a little bit out the cost out programs and the cadence that you are expecting out of that? And how that is going to impact your gross margins going forward? And then what other programs you have on horizon that you can talk about now?

Sure. So it’s important to remember that we are first and foremost a high technology company in the solar space. As are result, innovation creation, this is very much a part of our DNA. What we have in the R&D pipeline right now are products that are very much along the lines of the microinverter itself, as it’s applied to the commercial space as it’s applied to the utility space. We obviously have next generation microinverters for the residential space that add features and functions as well as reducing costs. So there is a tremendous amount of work going on in all of these areas, all of its very, very exciting. And then there is a lot more that I am not at liberty to talk about at this moment. But what we’d love to do is just invite everybody to the Solar Power International Trade Show that’s occurring at the end of October, where we will be announcing some new products and introducing some new services. But it’s a mix of products along the lines of cost reduction, performance in future enhancements and looking at new areas, new spaces that round out energy management.

Thank you. And our next question is coming from Josh Baribeau from Cannacord. So Josh, your line is now open.

Obviously given the strong guidance it doesn’t look like you are seeing any push outs of projects from the anti-dumping or countervailing measures that has come out. Just curious to hear your general thoughts on that and how it may affect you going forward?

Sure. So clearly pricing going up is not good for anybody in the industry. We all have a responsibility to continue to reduce prices, to make solar more affordable and more available to more and more parts of the world. However, what’s happening right now is certainly being recognized by Enphase and the entire solar industry. I think what’s important to note here is that industry in the United States is very robust, it has tremendous momentum and while it might be slightly affected by some of these numbers, I think overall we should not expect a very material difference to demand. Based on the latest data that we have, we think that the effect of these pricing changes could mean somewhere in the neighborhood of $0.10 a watt on the module side, which well meaningful is very likely not catastrophic. So we need to work hard to continue to reduce prices all of us, all the actors in the space. But I think again the industry and companies are mature enough and have enough momentum that they can withstand something like this.

And back towards some of the discussions you were having on the different types of financing; do you have the level of visibility to either quantify the risk premium or ideally the decrease in the risk premium in the interest rates of Enphase solar systems? Do you have that level of granularity?

I don’t have that level of granularity available off hand right now. What I can say is that in many of these cases, the fact that Enphase produces more energy allows for a better rate of return for the both the owners of the system whoever that maybe, either the lease provider or the actual consumer. And because of the reliability which we have embedded many times with some of the largest financing companies in the world, allows for a better financing option at better financing terms for an Enphase system. So, I think we are in very, very good shape but I can’t quantify it exactly that you are asking for.

Thank you. And our next question is from Vishal Shah from Deutsche Bank. Vishal, please go ahead.

Hi, this is Jeremiah on the line for Vishal. May be just wanted to touch again on the international side of things. It sounds like you are progressing well there. Would your focus going forward be more along the lines of expanding market share in the existing international markets or potentially expanding the tank? Paul Nahi Both. We are very focused on establishing and growing the beach as we currently have in the APAC region in Australia as well as in EMEA which is both in the UK as well as France. We’re going to be expanding our market share in all the countries we are currently in but we really just started our expansion into Continental Europe, there are many countries, significant countries that we are not in. So we’re going to continue that geographic expansion as well. It’s important to note that Continental Europe especially is a bit of challenge to solar environment right now. So you are going to see some ups and downs there. However, we very firmly believe in the long-term potential of that market. So, we are going to continue to invest and grow the infrastructure there while we gain share, grow markets and then we can advantage of the growth that we see coming in the next few years.

And I guess along the same lines you are starting to get involved more in commercial. If you could speak of to the opportunity there, and kind of time horizon?

I can speak a part of that. So we definitely see a very large opportunity for Enphase in the commercial market, we already have a very sizable market share in this small commercial market. We have not really entered the large commercial market yet. Although we do have some large commercial installations, those and even the small commercial installations are effectively being done with our residential product. While we’ve said that several times now, is that we are well underway in the development of a purpose build commercial microinverter and not just the hardware sales but the entire system to support the commercial market. We have not announced the timing of that yet but the initial discussions with potential and solar partners as well as the progress we are making the engineering are both very positive.

Our next question comes from Pavel Molchanov from Raymond James. Please go ahead. Pavel Molchanov - Raymond James & Associates: I know that you are not breaking out revenue by product or by segment. But can you give us a sense of kind of what percentage of your mix currently is hardware versus software or the new O&M revenues?

So, we don’t break that out, and part of the reason we don’t break that out is because we view it as a system. That when you are buying an Enphase System, you are buying the hardware; you are buying the monitoring platform. And in many cases for the installer they are leveraging our monitoring platform for their O&M infrastructure for filling for host of different reasons. So we don’t separate the two right now, we view it as a single system. And if you are referring to Enphase Energy Services that is still very young in development and as that progress we’ll provide more data on that. Pavel Molchanov - Raymond James & Associates: And along the same lines, I know you’ve talked directionally in the past about potentially having some kind of additional revenue opportunity from selling analytics to utilities that kind of thing big data. What’s kind of latest on that front?

So there is actually a lot of work going on there. Again it’s interesting to note that at 500 gigabytes of data everyday Enphase collects and manages more data on a daily basis than Twitter does. So we actually have a tremendous IP infrastructure to support the data collection and analytics as well as the data itself. And we are exploring multiple ways to leverage that data into new customers and new markets. Again it’s a bit too early to have that discussion but I can say there is a lot of internal work going on to leverage this tremendous resource that we have. Pavel Molchanov - Raymond James & Associates: So in other words you haven’t monetized that yet, but you hope do in the future?

Again I would quantify that, I think that the data has been monetized everyday through the microinverter itself. But if you are referring to the data only, that’s exactly correct.

Thank you. And our next question comes from Pierre Maccagno from Dougherty. Please go ahead. Pierre Maccagno - Dougherty & Company: Do you have any comments on possible penetration into China?

So our first target in that region will very likely be Japan and we are still early in the exploration of that market itself. We are working through the technical issues; we are working through the go-to-market and partnership issues. We’re feeling very confident, but we’re not ready to making these specific announcements there yet. We do not as of now have any direct plans to get into China, clearly over time that will be an important market for us. But in the foreseeable future there is a lot of other low hanging fruit that we’ll be going after first. Pierre Maccagno - Dougherty & Company: And then any comments on the SolarCity? I understand that you don’t use microinverters and can you expand on the possibility of this changing in the future or what are your thoughts there?

That sounds more like a question for SolarCity than it does for Enphase. What I can say is that we have the majority of the largest, most successful, the fastest growing companies in the U.S. and in the world right now use Enphase Microinverter Systems. They use it because it generates more energy, because it simplifies the installation process, they can become more efficient and of course in all the O&M ease of doing business on the operations and maintenance side as well. So we are very, very comfortable with the growth and customers that we have, the breadth of customers that we have and candidly the quality of customers. When you look at what we are doing with the very large vertically integrated installers that are just doing tremendously it’s very exciting. We have a two tier distribution strategy, and our distribution partners are also doing very, very well. Interestingly electrical distribution is really doing well, it’s really taking off and that’s addressing the small-to-medium size installers, which is growing also. So it’s a very wide and broad market and we are I think executing quite well and being able to attract the best from all these different segments. Pierre Maccagno - Dougherty & Company: And my last follow up, touching again on the anti-dumping duties. Have you gotten any type of feedback from customers for any pricing pressure or these conversations, I mean are they taking place at all or not?

Are you referring to pricing pressure with Enphase or with the modules? Pierre Maccagno - Dougherty & Company: For Enphase Microinverters.

So we have pricing discussions with all of our customers every day, that’s been going on for a seven, eight years now. Is there anything new happening there? No. The dynamics change year-to-year, quarter-to-quarter, but the fact is that we have to continuously work to reduce our costs. We’ve recognized that as our responsibility. And if you look historically, we have been able to significantly reduce our prices somewhere in the neighborhood of 10% plus on a year-over-year basis. So we take that responsibility seriously and we feel very good about our ability to maintain the pricing level that our customers are demanding. Pierre Maccagno - Dougherty & Company: So as of now there is no effect of the anti-dumping duties then?

Again I am not sure how to answer that question. I think that there is very likely an effect. How big an effect that is probably questionable and how big of an effect that would have on overall demand is yet again different than how much of an effect that would have on Enphase. As far as we are concerned, as I mentioned earlier I do think that prices going up is not good and could have an effect on demand. However the industry is robust and strong and I think we can overcome this.

Thank you sir. (Operator Instructions). Our next question comes from Steve Baughman from Divisar Capital. Please go ahead.

Kris just a quick one. What’s the diluted share count going to be next quarter? It looks like you guys are probably going to be even GAAP profitable?

So the basic share count is more like 42 million shares. If you add in the dilutive impact of equity instruments which are out there, you are looking more to like 47 million shares.

And that actually concludes our Q&A session for today. I’d like to turn it back to the host for any concluding remarks.

Thank you all for joining our call. All of us at Enphase are committed to developing successive generations of microinverter system expanding our technology leadership position growing our business in our core markets. All of us are looking forward to expanding into new geographies, new segments and exploring untapped market opportunities. Enphase is going to be exhibiting exciting new products at the Solar Power International Trade Show in Las Vegas on October 20th through 23rd and we hope to see you there. Thank you and we look forward to speaking with you again next quarter.

Ladies and gentlemen at this time this does concludes our conference for today. Everyone have a great day. You may now disconnect.