TIGO ENERGY, INC. Q3 FY2024 earnings call

• Since the fourth quarter of 2023, Tigo has seen increased quarterly revenue growth in the last three quarters of 2024 and gained market share in the global DC optimizer market, going from 9% in 2022 to 13% in 2023.
• Had success in the utility scale market, including a project in Brazil with the TS4-X-O device and completion of a 142-megawatt project in Spain.
• EI software solution's Predict+ AI-based platform has 62,000 meters under management, with six new contracts signed in the quarter totaling $700,000 in multiyear value, increasing annual recurring revenue to $1.3 million.
• Saw positive sales growth in Czech Republic, Spain, UK, Puerto Rico, and notable growth in Thailand and Australia.
• Welcomed back Anita Chang as Chief Operating Officer, leveraging her experience in supply chain operations.

In the third quarter of 2024, revenue was $14.2 million, a 16.8% decrease from the prior year period but a 12.1% sequential increase. By region, EMEA revenue was 60% of total revenues, a 23.5% sequential increase; Americas revenue was 21% of total revenues, a 3.7% sequential increase; APAC revenue was 19% of total revenues, a 7% sequential decline. Inventories net decreased by $4.5 million or 8.8% compared to prior periods, and cash, cash equivalents, and marketable securities totaled $19.5 million at September 30, 2024.

• For the fourth quarter of 2024, Tigo expects revenues to range between $14 million and $17 million, and adjusted EBITDA loss to range between $6.5 million and $8.5 million.
• Normalized margins on an outsourced manufacturing model are mid-30s, aiming to reach high 30s and eventually 40% as revenue grows and economy of scale is achieved.

• Forward-looking statements are subject to known and unknown risks and uncertainties, including those in SEC filings.
• Inventory charges of $3.4 million in Q3 related to battery inventory, with potential additional charges in Q4 related to the GO ESS product line due to pricing environment.

Q: Philip Shen asked about margins outlook, cadence of revenue and margins through 2025.

A: Bill Roeschlein said normalized margins mid-30s, aiming for 40%, Q4 guidance flat to up 20%, with progress towards EBITDA breakeven.

Q: Philip Shen asked about European channel inventory clearing.

A: Bill Roeschlein said channel inventory mostly cleared, but macro-level distributor inventory still elevated. Zvi Alon added repeat orders from existing customers are growing.

Q: Philip Shen asked about EBITDA breakeven timing.

A: Bill Roeschlein said depends on growth rate, previously expected first half 2025, now likely second half.

Q: Philip Shen asked about pricing action.

A: Zvi Alon said Tigo has not decreased prices, TS4-X product line introduced at higher price with good orders.

Q: Eric Stine asked about current market share trends.

A: Bill Roeschlein said third-party reports and competitor unit volume comparisons show continued share gain. Zvi Alon added Tigo is best-selling optimizer in some European markets.

Q: Eric Stine asked about rapid shutdown device licensing pipeline.

A: Zvi Alon said licensees are growing steadily.

Q: Sameer Joshi asked about charge direction and cause.

A: Bill Roeschlein said charge not related to obsolescence, related to GO ESS product line with steep price curve, part of year-end audit for remaining balance of GO ESS products.