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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
(State or other jurisdiction of
incorporation or organization)
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20-4645388
(I.R.S. Employer
Identification No.)
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1420 N. McDowell Blvd.
Petaluma, California
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94954
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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x
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Emerging growth Company
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¨
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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Financial Statements (Unaudited)
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June 30,
2018 |
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December 31,
2017 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
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$
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58,471
|
|
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$
|
29,144
|
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Accounts receivable, net of allowances of $3,071 and $2,378 at June 30, 2018 and December 31, 2017, respectively
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58,696
|
|
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65,346
|
|
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Inventory
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17,471
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|
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25,999
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||
Prepaid expenses and other assets
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20,741
|
|
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9,957
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Total current assets
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155,379
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|
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130,446
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Property and equipment, net
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23,100
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|
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26,483
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Goodwill
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3,664
|
|
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3,664
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Intangibles, net
|
363
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|
|
515
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|
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Other assets
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36,030
|
|
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8,039
|
|
||
Total assets
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$
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218,536
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|
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$
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169,147
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
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21,895
|
|
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$
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28,747
|
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Accrued liabilities
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31,095
|
|
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22,447
|
|
||
Deferred revenues, current
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34,954
|
|
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15,691
|
|
||
Warranty obligations, current (includes $3,209 and $2,240 measured at fair value at June 30, 2018 and December 31, 2017, respectively)
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8,275
|
|
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7,427
|
|
||
Debt, current
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18,429
|
|
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17,429
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|
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Total current liabilities
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114,648
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|
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91,741
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|
||
Long-term liabilities:
|
|
|
|
||||
Deferred revenues, noncurrent
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75,107
|
|
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29,941
|
|
||
Warranty obligations, noncurrent (includes $9,627 and $7,550 measured at fair value at June 30, 2018 and December 31, 2017, respectively)
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23,367
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|
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22,389
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|
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Other liabilities
|
1,970
|
|
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1,880
|
|
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Debt, noncurrent
|
33,559
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|
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32,322
|
|
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Total liabilities
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248,651
|
|
|
178,273
|
|
||
Commitments and contingencies
|
|
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Stockholders’ equity:
|
|
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|
||||
Preferred stock, $0.00001 par value, 10,000 shares authorized; none issued and outstanding
|
—
|
|
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—
|
|
||
Common stock, $0.00001 par value, 150,000,000 shares and 125,000 shares authorized; and 98,082 and 85,914 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively
|
1
|
|
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1
|
|
||
Additional paid-in capital
|
313,778
|
|
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287,256
|
|
||
Accumulated deficit
|
(343,541
|
)
|
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(295,727
|
)
|
||
Accumulated other comprehensive loss
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(353
|
)
|
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(656
|
)
|
||
Total stockholders’ deficit
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(30,115
|
)
|
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(9,126
|
)
|
||
Total liabilities and stockholders’ equity
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$
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218,536
|
|
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$
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169,147
|
|
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Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
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2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenues
|
$
|
75,896
|
|
|
$
|
74,704
|
|
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$
|
145,868
|
|
|
$
|
129,455
|
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Cost of revenues
|
53,195
|
|
|
61,157
|
|
|
104,851
|
|
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108,861
|
|
||||
Gross profit
|
22,701
|
|
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13,547
|
|
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41,017
|
|
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20,594
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
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||||||||
Research and development
|
9,462
|
|
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7,947
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17,082
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|
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17,552
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|
||||
Sales and marketing
|
6,828
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|
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6,274
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|
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13,055
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|
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12,732
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|
||||
General and administrative
|
6,969
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|
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4,964
|
|
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13,913
|
|
|
10,797
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|
||||
Restructuring charges
|
—
|
|
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3,609
|
|
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—
|
|
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10,856
|
|
||||
Total operating expenses
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23,259
|
|
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22,794
|
|
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44,050
|
|
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51,937
|
|
||||
Loss from operations
|
(558
|
)
|
|
(9,247
|
)
|
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(3,033
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)
|
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(31,343
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)
|
||||
Other expense, net:
|
|
|
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||||||||
Interest expense
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(2,269
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)
|
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(2,080
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)
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(4,562
|
)
|
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(4,219
|
)
|
||||
Other income (expense)
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(572
|
)
|
|
88
|
|
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(698
|
)
|
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1,148
|
|
||||
Total other expense, net
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(2,841
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)
|
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(1,992
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)
|
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(5,260
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)
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(3,071
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)
|
||||
Loss before income taxes
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(3,399
|
)
|
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(11,239
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)
|
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(8,293
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)
|
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(34,414
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)
|
||||
Provision for income taxes
|
(339
|
)
|
|
(854
|
)
|
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(573
|
)
|
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(984
|
)
|
||||
Net loss
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$
|
(3,738
|
)
|
|
$
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(12,093
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)
|
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$
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(8,866
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)
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$
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(35,398
|
)
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Net loss per share:
|
|
|
|
|
|
|
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||||||||
Basic and diluted
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$
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(0.04
|
)
|
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$
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(0.14
|
)
|
|
$
|
(0.09
|
)
|
|
$
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(0.44
|
)
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Shares used in per share calculation:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
97,321
|
|
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84,434
|
|
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94,026
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|
|
80,542
|
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net loss
|
$
|
(3,738
|
)
|
|
$
|
(12,093
|
)
|
|
$
|
(8,866
|
)
|
|
$
|
(35,398
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
15
|
|
|
462
|
|
|
303
|
|
|
123
|
|
||||
Comprehensive loss
|
$
|
(3,723
|
)
|
|
$
|
(11,631
|
)
|
|
$
|
(8,563
|
)
|
|
$
|
(35,275
|
)
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(8,866
|
)
|
|
$
|
(35,398
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
4,469
|
|
|
4,583
|
|
||
Provision for doubtful accounts
|
753
|
|
|
707
|
|
||
Asset impairment and restructuring
|
—
|
|
|
1,765
|
|
||
Amortization of debt issuance costs
|
1,133
|
|
|
1,063
|
|
||
Stock-based compensation
|
5,860
|
|
|
3,550
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
5,897
|
|
|
3,910
|
|
||
Inventory
|
8,528
|
|
|
11,121
|
|
||
Prepaid expenses and other assets
|
(1,551
|
)
|
|
(5,338
|
)
|
||
Accounts payable, accrued and other liabilities
|
(3,817
|
)
|
|
(14,107
|
)
|
||
Warranty obligations
|
1,826
|
|
|
199
|
|
||
Deferred revenues
|
(6,791
|
)
|
|
3,620
|
|
||
Net cash provided by (used in) operating activities
|
7,441
|
|
|
(24,325
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(1,475
|
)
|
|
(3,515
|
)
|
||
Net cash used in investing activities
|
(1,475
|
)
|
|
(3,515
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of common stock, net of issuance costs
|
19,923
|
|
|
26,425
|
|
||
Proceeds from debt
|
5,580
|
|
|
24,240
|
|
||
Principal payments on term debt
|
(3,129
|
)
|
|
—
|
|
||
Payments under revolving credit facility
|
—
|
|
|
(10,100
|
)
|
||
Proceeds from issuance of common stock under employee stock plans
|
1,370
|
|
|
170
|
|
||
Net cash provided by financing activities
|
23,744
|
|
|
40,735
|
|
||
Effect of exchange rate changes on cash
|
(383
|
)
|
|
294
|
|
||
Net increase in cash and cash equivalents
|
29,327
|
|
|
13,189
|
|
||
Cash and cash equivalents—Beginning of period
|
29,144
|
|
|
17,764
|
|
||
Cash and cash equivalents—End of period
|
$
|
58,471
|
|
|
$
|
30,953
|
|
Supplemental disclosures of non-cash investing and financing activities:
|
|
|
|
||||
Purchases of fixed and intangible assets included in accounts payable
|
$
|
112
|
|
|
$
|
311
|
|
Warrants issued in connection with debt
|
$
|
—
|
|
|
$
|
1,447
|
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||
Primary geographical markets:
|
|
|
|
|
||||
United States
|
|
$
|
50,258
|
|
|
$
|
93,388
|
|
International
|
|
25,638
|
|
|
52,480
|
|
||
Total
|
|
$
|
75,896
|
|
|
$
|
145,868
|
|
|
|
|
|
|
||||
Timing of revenue recognition:
|
|
|
|
|
||||
Products transferred at a point in time
|
|
$
|
65,937
|
|
|
$
|
125,308
|
|
Products and services transferred over time
|
|
9,959
|
|
|
20,560
|
|
||
Total
|
|
$
|
75,896
|
|
|
$
|
145,868
|
|
|
|
June 30, 2018
|
||
Receivables
|
|
$
|
58,696
|
|
Short-term contract assets (Prepaid expenses and other assets)
|
|
13,626
|
|
|
Long-term contract assets (Other assets)
|
|
33,134
|
|
|
Short-term contract liabilities (Deferred revenues, current)
|
|
34,954
|
|
|
Long-term contract liabilities (Deferred revenues, noncurrent)
|
|
$
|
75,107
|
|
|
|
June 30, 2018
|
||
Contract Liabilities
|
|
|
||
Balance on January 1, 2018
|
|
$
|
116,830
|
|
Revenue recognized
|
|
(22,560
|
)
|
|
Increase due to billings
|
|
15,791
|
|
|
Balance as of June 30, 2018
|
|
$
|
110,061
|
|
Deferred revenue, current
|
|
34,954
|
|
|
Deferred revenue, noncurrent
|
|
75,107
|
|
|
|
|
|
||
Contract Assets
|
|
|
||
Balance on January 1, 2018
|
|
$
|
47,862
|
|
Amount recognized
|
|
(7,634
|
)
|
|
Increase
|
|
6,579
|
|
|
Balance as of June 30, 2018
|
|
$
|
46,807
|
|
|
|
June 30, 2018
|
||
Remainder of 2018
|
|
$
|
19,849
|
|
2019
|
|
29,349
|
|
|
2020
|
|
23,194
|
|
|
2021
|
|
16,997
|
|
|
2022
|
|
11,940
|
|
|
Thereafter
|
|
8,732
|
|
|
Total
|
|
$
|
110,061
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
As Reported
|
|
Adjustments
|
|
Without Adoption of Topic 606
|
|
As Reported
|
|
Adjustments
|
|
Without Adoption of Topic 606
|
||||||||||||
Net revenues
|
$
|
75,896
|
|
|
$
|
(2,019
|
)
|
|
$
|
73,877
|
|
|
$
|
145,868
|
|
|
$
|
(2,458
|
)
|
|
$
|
143,410
|
|
Cost of revenues
|
53,195
|
|
|
(827
|
)
|
|
52,368
|
|
|
104,851
|
|
|
(996
|
)
|
|
103,855
|
|
||||||
Gross profit
|
22,701
|
|
|
(1,192
|
)
|
|
21,509
|
|
|
41,017
|
|
|
(1,462
|
)
|
|
39,555
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Research and development
|
9,462
|
|
|
—
|
|
|
9,462
|
|
|
17,082
|
|
|
—
|
|
|
17,082
|
|
||||||
Sales and marketing
|
6,828
|
|
|
(23
|
)
|
|
6,805
|
|
|
13,055
|
|
|
(58
|
)
|
|
12,997
|
|
||||||
General and administrative
|
6,969
|
|
|
—
|
|
|
6,969
|
|
|
13,913
|
|
|
—
|
|
|
13,913
|
|
||||||
Restructuring charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total operating expenses
|
23,259
|
|
|
(23
|
)
|
|
23,236
|
|
|
44,050
|
|
|
(58
|
)
|
|
43,992
|
|
||||||
Loss from operations
|
(558
|
)
|
|
(1,169
|
)
|
|
(1,727
|
)
|
|
(3,033
|
)
|
|
(1,404
|
)
|
|
(4,437
|
)
|
||||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
(2,269
|
)
|
|
—
|
|
|
(2,269
|
)
|
|
(4,562
|
)
|
|
—
|
|
|
(4,562
|
)
|
||||||
Other income (expense)
|
(572
|
)
|
|
—
|
|
|
(572
|
)
|
|
(698
|
)
|
|
—
|
|
|
(698
|
)
|
||||||
Total other expense, net
|
(2,841
|
)
|
|
—
|
|
|
(2,841
|
)
|
|
(5,260
|
)
|
|
—
|
|
|
(5,260
|
)
|
||||||
Loss before income taxes
|
(3,399
|
)
|
|
(1,169
|
)
|
|
(4,568
|
)
|
|
(8,293
|
)
|
|
(1,404
|
)
|
|
(9,697
|
)
|
||||||
Provision for income taxes
|
(339
|
)
|
|
—
|
|
|
(339
|
)
|
|
(573
|
)
|
|
—
|
|
|
(573
|
)
|
||||||
Net loss
|
$
|
(3,738
|
)
|
|
$
|
(1,169
|
)
|
|
$
|
(4,907
|
)
|
|
$
|
(8,866
|
)
|
|
$
|
(1,404
|
)
|
|
$
|
(10,270
|
)
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic and diluted
|
$
|
(0.04
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.11
|
)
|
Shares used in per share calculation:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic and diluted
|
97,321
|
|
|
|
|
|
97,321
|
|
|
94,026
|
|
|
|
|
|
94,026
|
|
|
June 30, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
Without Adoption of Topic 606
|
||||||
Prepaid expenses and other
|
$
|
20,741
|
|
|
$
|
(9,878
|
)
|
|
$
|
10,863
|
|
Other assets
|
36,030
|
|
|
(27,856
|
)
|
|
8,174
|
|
|||
Accrued liabilities
|
31,095
|
|
|
(5,180
|
)
|
|
25,915
|
|
|||
Deferred revenues
|
34,954
|
|
|
(19,884
|
)
|
|
15,070
|
|
|||
Deferred revenues, noncurrent
|
75,107
|
|
|
(50,210
|
)
|
|
24,897
|
|
|||
Accumulated deficit
|
$
|
(343,541
|
)
|
|
$
|
37,540
|
|
|
$
|
(306,001
|
)
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Raw materials
|
$
|
2,889
|
|
|
$
|
2,341
|
|
Finished goods
|
14,582
|
|
|
23,658
|
|
||
Total inventory
|
$
|
17,471
|
|
|
$
|
25,999
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Warranty obligations, beginning of period
|
$
|
30,625
|
|
|
$
|
31,995
|
|
|
$
|
29,816
|
|
|
$
|
31,414
|
|
Accruals for warranties issued during period
|
775
|
|
|
1,089
|
|
|
1,533
|
|
|
1,921
|
|
||||
Changes in estimates
|
1,378
|
|
|
(91
|
)
|
|
2,828
|
|
|
203
|
|
||||
Settlements
|
(2,099
|
)
|
|
(1,981
|
)
|
|
(3,775
|
)
|
|
(3,598
|
)
|
||||
Increase due to accretion expense
|
520
|
|
|
499
|
|
|
939
|
|
|
993
|
|
||||
Other
|
443
|
|
|
102
|
|
|
301
|
|
|
680
|
|
||||
Warranty obligations, end of period
|
$
|
31,642
|
|
|
$
|
31,613
|
|
|
$
|
31,642
|
|
|
$
|
31,613
|
|
Less current portion
|
|
|
|
|
|
|
$
|
(8,275
|
)
|
|
$
|
(8,032
|
)
|
||
Noncurrent
|
|
|
|
|
|
|
$
|
23,367
|
|
|
$
|
23,581
|
|
•
|
Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of such assets or liabilities do not entail a significant degree of judgment.
|
•
|
Level 2—Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
|
•
|
Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
|
|
Fair Value
Hierarchy |
|
June 30,
2018 |
|
December 31,
2017 |
||||
Liabilities:
|
|
|
|
|
|
||||
Warranty obligations
|
Level 3
|
|
$
|
12,836
|
|
|
$
|
9,790
|
|
Third party option to purchase receivables at a discount
|
Level 3
|
|
—
|
|
|
700
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Balance at beginning of period
|
$
|
11,719
|
|
|
$
|
11,627
|
|
|
$
|
9,790
|
|
|
$
|
10,332
|
|
Accruals for warranties issued during period
|
775
|
|
|
1,080
|
|
|
1,533
|
|
|
1,910
|
|
||||
Changes in estimates
|
210
|
|
|
(351
|
)
|
|
1,995
|
|
|
(617
|
)
|
||||
Settlements
|
(831
|
)
|
|
(393
|
)
|
|
(1,722
|
)
|
|
(735
|
)
|
||||
Increase due to accretion expense
|
520
|
|
|
499
|
|
|
939
|
|
|
994
|
|
||||
Other
|
443
|
|
|
102
|
|
|
301
|
|
|
680
|
|
||||
Balance at end of period
|
$
|
12,836
|
|
|
$
|
12,564
|
|
|
$
|
12,836
|
|
|
$
|
12,564
|
|
Item Measured at Fair Value
|
|
Valuation Technique
|
|
Description of Significant Unobservable Input
|
|
Percent Used
(Weighted-Average)
|
Warranty obligations for microinverters sold since January 1, 2014
|
|
Discounted cash flows
|
|
Profit element and risk premium
|
|
16%
|
|
|
Credit-adjusted risk-free rate
|
|
16%
|
Item Measured at Fair Value
|
|
Valuation Technique
|
|
Description of Significant Unobservable Input
|
|
Percent Used
(Weighted-Average)
|
Warranty obligations for microinverters sold since January 1, 2014
|
|
Discounted cash flows
|
|
Profit element and risk premium
|
|
17%
|
|
|
Credit-adjusted risk-free rate
|
|
17%
|
||
Third party option to purchase receivables at a discount
|
|
Discounted cash flows
|
|
Counter party credit-adjusted risk-free rate
|
|
4%
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Goodwill
|
$
|
3,664
|
|
|
$
|
—
|
|
|
$
|
3,664
|
|
|
$
|
3,664
|
|
|
$
|
—
|
|
|
$
|
3,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other indefinite-lived intangibles
|
$
|
286
|
|
|
$
|
—
|
|
|
$
|
286
|
|
|
$
|
286
|
|
|
$
|
—
|
|
|
$
|
286
|
|
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Patents and licensed technology
|
1,665
|
|
|
(1,588
|
)
|
|
77
|
|
|
1,665
|
|
|
(1,436
|
)
|
|
229
|
|
||||||
Total purchased intangible assets
|
$
|
1,951
|
|
|
$
|
(1,588
|
)
|
|
$
|
363
|
|
|
$
|
1,951
|
|
|
$
|
(1,436
|
)
|
|
$
|
515
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Employee severance and benefit arrangements
|
$
|
—
|
|
|
$
|
123
|
|
|
$
|
—
|
|
|
$
|
1,715
|
|
Asset impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
522
|
|
||||
Consultants engaged in restructuring activities
|
—
|
|
|
3,000
|
|
|
—
|
|
|
7,000
|
|
||||
Lease loss reserves and contract termination costs
|
—
|
|
|
486
|
|
|
—
|
|
|
1,619
|
|
||||
Total restructuring and asset impairment charges
|
$
|
—
|
|
|
$
|
3,609
|
|
|
$
|
—
|
|
|
$
|
10,856
|
|
|
Employee Severance and Benefits
|
|
Lease Loss Reserves and Contractual Obligations
|
|
Total
|
||||||
Balance at end of period as of December 31, 2017
|
$
|
229
|
|
|
$
|
1,094
|
|
|
$
|
1,323
|
|
Cash payments and receipts, net
|
(229
|
)
|
|
54
|
|
|
(175
|
)
|
|||
Balance at end of period as of June 30, 2018
|
$
|
0
|
|
|
$
|
1,148
|
|
|
$
|
1,148
|
|
Year
|
Amounts
|
||
2018
|
$
|
4,779
|
|
2019
|
25,238
|
|
|
2020
|
16,854
|
|
|
Total
|
$
|
46,871
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Term loan
|
$
|
46,871
|
|
|
$
|
50,000
|
|
Less unamortized discount and issuance costs
|
(1,557
|
)
|
|
(2,111
|
)
|
||
Carrying amount of term loan
|
45,314
|
|
|
47,889
|
|
||
Sale of long term financing receivable recorded as debt
|
6,674
|
|
|
2,562
|
|
||
Less value of future purchase option
|
—
|
|
|
(700
|
)
|
||
Carrying amount of sale of long term financing receivable recorded as debt
|
6,674
|
|
|
1,862
|
|
||
Total carrying amount of debt
|
51,988
|
|
|
49,751
|
|
||
Less current portion term loan
|
(16,380
|
)
|
|
(15,715
|
)
|
||
Less current portion of long term financing receivable recorded as debt
|
(2,049
|
)
|
|
(1,714
|
)
|
||
Long-term debt
|
$
|
33,559
|
|
|
$
|
32,322
|
|
|
Number of
Shares
Outstanding
|
|
Weighted-
Average
Exercise Price
per Share
|
|||
Outstanding at December 31, 2017
|
8,426
|
|
|
$
|
1.77
|
|
Granted
|
213
|
|
|
4.43
|
|
|
Exercised
|
(803
|
)
|
|
1.73
|
|
|
Canceled
|
(149
|
)
|
|
5.06
|
|
|
Outstanding at June 30, 2018
|
7,687
|
|
|
$
|
1.78
|
|
|
RSUs and PSUs
|
|
Weighted Average
Fair Value per Share at Grant Date |
|||
Outstanding at December 31, 2017
|
3,505
|
|
|
$
|
2.03
|
|
Granted
|
3,536
|
|
|
3.47
|
|
|
Vested
|
(702
|
)
|
|
2.52
|
|
|
Canceled
|
(250
|
)
|
|
2.19
|
|
|
Outstanding at June 30, 2018
|
6,089
|
|
|
$
|
2.80
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Cost of revenues
|
$
|
417
|
|
|
$
|
211
|
|
|
$
|
615
|
|
|
$
|
449
|
|
Research and development
|
1,149
|
|
|
636
|
|
|
1,767
|
|
|
1,387
|
|
||||
Sales and marketing
|
997
|
|
|
285
|
|
|
1,358
|
|
|
663
|
|
||||
General and administrative
|
1,725
|
|
|
489
|
|
|
2,120
|
|
|
1,051
|
|
||||
Total
|
$
|
4,288
|
|
|
$
|
1,621
|
|
|
$
|
5,860
|
|
|
$
|
3,550
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Stock options and RSUs and PSUs
|
$
|
3,975
|
|
|
$
|
1,291
|
|
|
$
|
5,293
|
|
|
$
|
2,890
|
|
Employee stock purchase plan
|
313
|
|
|
330
|
|
|
567
|
|
|
660
|
|
||||
Total
|
$
|
4,288
|
|
|
$
|
1,621
|
|
|
$
|
5,860
|
|
|
$
|
3,550
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Weighted average grant date fair value
|
$
|
3.51
|
|
|
$
|
0.71
|
|
|
$
|
2.74
|
|
|
$
|
0.71
|
|
Expected term (in years)
|
3.8
|
|
|
4.6
|
|
|
4.0
|
|
|
4.6
|
|
||||
Expected volatility
|
89.7
|
%
|
|
84.9
|
%
|
|
88.1
|
%
|
|
85.0
|
%
|
||||
Annual risk-free rate of return
|
2.7
|
%
|
|
1.8
|
%
|
|
2.6
|
%
|
|
1.8
|
%
|
||||
Dividend yield
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(3,738
|
)
|
|
$
|
(12,093
|
)
|
|
$
|
(8,866
|
)
|
|
$
|
(35,398
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
97,321
|
|
|
84,434
|
|
|
94,026
|
|
|
80,542
|
|
||||
Net loss per share, basic and diluted
|
$
|
(0.04
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.44
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Employee stock options
|
8,102
|
|
|
8,068
|
|
|
8,259
|
|
|
8,262
|
|
RSUs and PSUs
|
5,710
|
|
|
2,017
|
|
|
4,690
|
|
|
1,276
|
|
Warrants to purchase common stock
|
—
|
|
|
1,220
|
|
|
—
|
|
|
944
|
|
Total
|
13,812
|
|
|
11,305
|
|
|
12,949
|
|
|
10,482
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
June 30, |
|
Change in
|
|
Six Months Ended
June 30, |
|
Change in
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands)
|
|
(dollars in thousands)
|
||||||||||||||||||||||||||
Cost of revenues
|
$
|
53,195
|
|
|
$
|
61,157
|
|
|
$
|
(7,962
|
)
|
|
(13
|
)%
|
|
$
|
104,851
|
|
|
$
|
108,861
|
|
|
$
|
(4,010
|
)
|
|
(4
|
)%
|
Gross profit
|
22,701
|
|
|
13,547
|
|
|
9,154
|
|
|
68
|
%
|
|
41,017
|
|
|
20,594
|
|
|
20,423
|
|
|
99
|
%
|
||||||
Gross margin
|
29.9
|
%
|
|
18.1
|
%
|
|
|
|
|
|
|
28.1
|
%
|
|
15.9
|
%
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Change in
|
|
Six Months Ended
June 30, |
|
Change in
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands)
|
|
(dollars in thousands)
|
||||||||||||||||||||||||||
Research and development
|
$
|
9,462
|
|
|
$
|
7,947
|
|
|
$
|
1,515
|
|
|
19
|
%
|
|
$
|
17,082
|
|
|
$
|
17,552
|
|
|
$
|
(470
|
)
|
|
(3
|
)%
|
|
Three Months Ended
June 30, |
|
Change in
|
|
Six Months Ended
June 30, |
|
Change in
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(dollars in thousands)
|
|
(dollars in thousands)
|
||||||||||||||||||||||||||
General and administrative
|
$
|
6,969
|
|
|
$
|
4,964
|
|
|
$
|
2,005
|
|
|
40
|
%
|
|
$
|
13,913
|
|
|
$
|
10,797
|
|
|
$
|
3,116
|
|
|
29
|
%
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Net cash provided by (used in) operating activities
|
$
|
7,441
|
|
|
$
|
(24,325
|
)
|
Net cash used in investing activities
|
(1,475
|
)
|
|
(3,515
|
)
|
||
Net cash provided by financing activities
|
23,744
|
|
|
40,735
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
provide additional cash reserves to support our operations;
|
•
|
invest in our research and development efforts;
|
•
|
expand our operations into new product markets and new geographies;
|
•
|
acquire complementary businesses, products, services or technologies; or
|
•
|
otherwise pursue our strategic plans and respond to competitive pressures, including adjustments to our business to mitigate the effects of any tariffs that might apply to us or our industry.
|
•
|
market acceptance of solar PV systems based on our product platform;
|
•
|
cost competitiveness, reliability and performance of solar PV systems compared to conventional and non-solar renewable energy sources and products;
|
•
|
availability and amount of government subsidies and incentives to support the development and deployment of solar energy solutions;
|
•
|
the extent to which the electric power industry and broader energy industries are deregulated to permit broader adoption of solar electricity generation;
|
•
|
the cost and availability of key raw materials and components used in the production of solar PV systems;
|
•
|
prices of traditional utility-provided energy sources;
|
•
|
levels of investment by end-users of solar energy products, which tend to decrease when economic growth slows; and
|
•
|
the emergence, continuance or success of, or increased government support for, other alternative energy generation technologies and products.
|
•
|
changes in customer, geographic or product mix;
|
•
|
increased price competition, including the impact of customer and competitor discounts and rebates;
|
•
|
our ability to reduce and control product costs, including our ability to make product cost reductions in a timely manner to offset declines in our product prices;
|
•
|
warranty costs and reserves, including changes resulting from changes in estimates related to the long-term performance of our products, product replacement costs and warranty claim rates;
|
•
|
loss of cost savings due to changes in component or raw material pricing or charges incurred due to inventory holding periods if product demand is not correctly anticipated;
|
•
|
introduction of new products;
|
•
|
ordering patterns from our distributors;
|
•
|
price reductions on older products to sell remaining inventory;
|
•
|
component shortages and related expedited shipping costs;
|
•
|
our ability to reduce production costs, such as through technology innovations, in order to offset price declines in our products over time;
|
•
|
changes in shipment volume;
|
•
|
changes in distribution channels;
|
•
|
excess and obsolete inventory and inventory holding charges;
|
•
|
expediting costs incurred to meet customer delivery requirements; and
|
•
|
fluctuations in foreign currency exchange rates.
|
•
|
our ability to produce PV systems that compete favorably against other solutions on the basis of price, quality, reliability and performance;
|
•
|
our ability to timely introduce and complete new designs and timely qualify and certify our products;
|
•
|
whether installers, system owners and solar financing providers will continue to adopt our systems, which have a relatively limited history with respect to reliability and performance;
|
•
|
whether installers, system owners and solar financing providers will adopt our AC Battery storage solution, which is a relatively new technology with a limited history with respect to reliability and performance;
|
•
|
the ability of prospective system owners to obtain long-term financing for solar PV installations based on our product platform on acceptable terms or at all;
|
•
|
our ability to develop products that comply with local standards and regulatory requirements, as well as potential in-country manufacturing requirements; and
|
•
|
our ability to develop and maintain successful relationships with our customers and suppliers.
|
•
|
manage a dynamic organization;
|
•
|
expand third-party manufacturing, testing and distribution capacity;
|
•
|
execute on our cost reduction efforts and product initiatives with reduced headcount;
|
•
|
build additional custom manufacturing test equipment;
|
•
|
manage an increasing number of relationships with customers, suppliers and other third parties;
|
•
|
manage acquired businesses or technologies and integration efforts related to acquisitions;
|
•
|
increase our sales and marketing efforts;
|
•
|
train and manage a dynamic and increasingly international employee base;
|
•
|
broaden our customer support capabilities; and
|
•
|
implement new and upgrade existing operational and financial systems.
|
•
|
acceptance of microinverters in markets in which they have not traditionally been used;
|
•
|
our ability to compete in new product markets to which we are not accustomed;
|
•
|
our ability to manage manufacturing capacity and production;
|
•
|
willingness of our potential customers to incur a higher upfront capital investment than may be required for competing solutions;
|
•
|
timely qualification and certification of new products;
|
•
|
our ability to reduce production costs in order to price our products competitively over time;
|
•
|
availability of government subsidies and economic incentives for solar energy solutions;
|
•
|
accurate forecasting and effective management of inventory levels in line with anticipated product demand; and
|
•
|
our customer service capabilities and responsiveness.
|
•
|
differing regulatory requirements, including tax laws, trade laws, labor, safety, local content, recycling and consumer protection regulations, tariffs, export quotas, customs duties or other trade restrictions;
|
•
|
limited or unfavorable intellectual property protection;
|
•
|
risk of change in international political or economic conditions;
|
•
|
restrictions on the repatriation of earnings;
|
•
|
fluctuations in the value of foreign currencies and interest rates;
|
•
|
difficulties and increased expenses in complying with a variety of U.S. and foreign laws, regulations and trade standards, including the Foreign Corrupt Practices Act and UK Bribery Act;
|
•
|
potentially longer sales cycles;
|
•
|
higher volume requirements;
|
•
|
increased customer concentrations;
|
•
|
warranty expectations and product return policies; and
|
•
|
cost, performance and compatibility requirements.
|
•
|
obtain from a third party claiming infringement a license to sell or use the relevant technology, which may not be available on reasonable terms, or at all;
|
•
|
stop manufacturing, selling, incorporating or using our products that embody the asserted intellectual property;
|
•
|
pay substantial monetary damages;
|
•
|
indemnify our customers pursuant to indemnification obligations under some of our customer contracts; or
|
•
|
expend significant resources to redesign the products that use the infringing technology and to develop or acquire non-infringing technology.
|
•
|
seasonal and other fluctuations in demand for our products;
|
•
|
the timing, volume and product mix of sales of our products, which may have different average selling prices or profit margins;
|
•
|
changes in our pricing and sales policies or the pricing and sales policies of our competitors;
|
•
|
our ability to design, manufacture and deliver products to our customers in a timely and cost-effective manner and that meet customer requirements;
|
•
|
our ability to manage our relationships with our contract manufacturers, customers and suppliers;
|
•
|
quality control or yield problems in our manufacturing operations;
|
•
|
the anticipation, announcement or introductions of new or enhanced products by our competitors and ourselves;
|
•
|
reductions in the retail price of electricity;
|
•
|
changes in laws, regulations and policies applicable to our business and products, particularly those relating to government incentives for solar energy applications;
|
•
|
the impact of tariffs on the solar industry in general and our products in particular;
|
•
|
unanticipated increases in costs or expenses;
|
•
|
the amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our business operations;
|
•
|
the impact of government-sponsored programs on our customers;
|
•
|
our exposure to the credit risks of our customers, particularly in light of the fact that some of our customers are relatively new entrants to the solar market without long operating or credit histories;
|
•
|
our ability to estimate future warranty obligations due to product failure rates, claim rates or replacement costs;
|
•
|
our ability to forecast our customer demand and manufacturing requirements, and manage our inventory;
|
•
|
fluctuations in our gross profit;
|
•
|
our ability to predict our revenue and plan our expenses appropriately;
|
•
|
fluctuations in foreign currency exchange rates;
|
•
|
announcement of acquisitions or dispositions of our assets or business operations;
|
•
|
changes in our management; and
|
•
|
analyst reports or other news articles.
|
•
|
providing for a classified board of directors with staggered, three-year terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;
|
•
|
not providing for cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
|
•
|
authorizing our board of directors to issue, without stockholder approval, preferred stock rights senior to those of common stock, which could be used to significantly dilute the ownership of a hostile acquiror;
|
•
|
prohibiting stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
|
•
|
requiring the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of voting stock, voting as a single class, to amend provisions of our certificate of incorporation relating to the management of our business, our board of directors, stockholder action by written consent, advance notification of stockholder nominations and proposals, forum selection and the liability of our directors, or to amend our bylaws, which may inhibit the ability of stockholders or an acquiror to effect such amendments to facilitate changes in management or an unsolicited takeover attempt;
|
•
|
requiring special meetings of stockholders may only be called by our chairman of the board, if any, our chief executive officer, our president or a majority of our board of directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and
|
•
|
requiring advance notification of stockholder nominations and proposals, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Description
|
|
|
|
2.1
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
4.1
|
|
|
|
|
|
10.1*
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Document.
|
(1)
|
Previously filed as Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-35480), filed with the Securities and Exchange Commission on June 12, 2018, and incorporated by reference herein.
|
(2)
|
Previously filed as Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-35480), filed with the Securities and Exchange Commission on April 6, 2012, and incorporated by reference herein.
|
(3)
|
Previously filed as Exhibit 3.1 to the Quarterly Report on Form 10-Q (File No. 001-35480), filed with the Securities and Exchange Commission on August 9, 2017, and incorporated by reference herein.
|
(4)
|
Previously filed as Exhibit 3.5 to Amendment No. 7 to the Registration Statement on Form S-1/A (File No. 333-174925), filed with the Securities and Exchange Commission on March 12, 2012, and incorporated by reference herein.
|
(5)
|
Previously filed as Exhibit 4.1 to Amendment No. 7 to the Registration Statement on Form S-1/A (File No. 333-174925), filed with the Securities and Exchange Commission on March 12, 2012, and incorporated by reference herein
.
|
*
|
Management compensatory plan or arrangement.
|
**
|
The certifications attached as Exhibit 32.1 accompany this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by Enphase Energy, Inc. for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
|
|
ENPHASE ENERGY, INC.
|
||
|
|
|
|
|
By:
|
|
/s/ Eric Branderiz
|
|
|
|
Eric Branderiz
|
|
|
|
Vice President and Chief Financial Officer
|
|
|
|
(Duly Authorized Officer)
|
|
|
|
|
|
|
ENPHASE ENERGY, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Badrinarayanan Kothandaraman
|
|
|
|
Badrinarayanan Kothandaraman
President and Chief Executive Officer
|
◦
|
0% Payout of ESP shares occurs when ESV15 is less than $3.00 per share.
|
◦
|
0% to 150% Payout of ESP shares occurs, calculated linearly, when ESV15 is between $3.00 and $6.00 per share.
|
o
|
0% Payout of ESP shares occurs when ESV15 is equal to $3.00.
|
o
|
25% Payout of ESP shares occurs when ESV15 is equal to $3.50.
|
o
|
50% Payout of ESP shares occurs when ESV15 is equal to $4.00.
|
o
|
75% Payout of ESP shares occurs when ESV15 is equal to $4.50.
|
o
|
100% Payout of ESP shares occurs when ESV15 is equal to $5.00.
|
o
|
125% Payout of ESP shares occurs when ESV15 is equal to $5.50.
|
o
|
150% Payout of ESP shares occurs when ESV15 is equal to $6.00.
|
o
|
150% Payout of ESP shares occurs when ESV15 is greater than $6.00 per share.
|
◦
|
0% Payout of CGP shares occurs when 2018 CEO Goals completed are less than 65% of total including Stretch Goals
|
◦
|
50% Payout of CGP shares occurs when 2018 CEO Goals completed are greater than or equal to 65% but less than 80% of total including Stretch Goals
|
◦
|
100% Payout of CGP shares occurs when 2018 CEO Goals completed are greater than or equal to 80% but less than 100% of total including Stretch Goals
|
◦
|
150% Payout of CGP shares occurs when 2018 CEO Goals completed are greater than or equal to 100% of total including Stretch Goals
|
Title |
Date |
Identifying Number
or Brief Description |
|
|
|
|
Enphase Energy, Inc.:
|
Employee:
|
|
|
By:
|
/s/ Debra Machado
|
/s/ Eric Branderiz
|
|
|
|
Signature
|
|
Name:
|
Debra Machado
|
Eric Branderiz
|
|
|
|
|
|
Title:
|
VP, Human Resources
|
|
1.
|
I have reviewed this Form 10-Q of Enphase Energy, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Badrinarayanan Kothandaraman
|
|
Badrinarayanan Kothandaraman
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Form 10-Q of Enphase Energy, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Eric Branderiz
|
|
Eric Branderiz
|
|
Vice President and Chief Financial Officer
|
|
(Principal Financial Officer)
|
/s/ Badrinarayanan Kothandaraman
|
|
/s/ Eric Branderiz
|
Badrinarayanan Kothandaraman
President and Chief Executive Officer
|
|
Eric Branderiz
Vice President and Chief Financial Officer
|