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Enphase Energy Reports Financial Results for the Third Quarter of 2021

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FREMONT, Calif., Oct. 26, 2021 (GLOBE NEWSWIRE) -- Enphase Energy, Inc. (NASDAQ: ENPH), a global energy technology company and the world’s leading supplier of microinverter-based solar and battery systems, announced today financial results for the third quarter of 2021, which included the summary below from its President and CEO, Badri Kothandaraman.

We reported record quarterly revenue of $351.5 million in the third quarter of 2021, along with 40.8% for non-GAAP gross margin. We shipped approximately 2,599,575 microinverters, or 913 megawatts DC, and 65 megawatt hours of Enphase Storage systems.

Financial highlights for the third quarter of 2021 are listed below.

  • Record revenue of $351.5 million

  • GAAP gross margin of 39.9%; non-GAAP gross margin of 40.8%

  • GAAP operating income of $37.4 million; non-GAAP operating income of $85.9 million

  • GAAP net income of $21.8 million, non-GAAP net income of $84.2 million

  • GAAP diluted earnings per share of $0.15; non-GAAP diluted earnings per share of $0.60

  • Cash flow from operations of $113.4 million

  • Ending cash, cash equivalents and marketable securities balance of $1.4 billion

Our revenue and earnings for the third quarter of 2021 are provided below, compared with those of the prior quarter and the year ago quarter:

(In thousands, except per share data and percentages)

GAAP

Non-GAAP

Q3 2021

Q2 2021

Q3 2020

Q3 2021

Q2 2021

Q3 2020

Revenue

$

351,519

$

316,057

$

178,503

$

351,519

$

316,057

$

178,503

Gross margin

39.9

%

40.4

%

53.2

%

40.8

%

40.8

%

41.0

%

Operating expenses

$

103,007

$

68,401

$

43,222

$

57,341

$

51,696

$

29,571

Operating income

$

37,351

$

59,400

$

51,759

$

85,932

$

77,165

$

43,675

Net income

$

21,809

$

39,351

$

39,362

$

84,157

$

74,676

$

41,760

Basic EPS

$

0.16

$

0.29

$

0.31

$

0.62

$

0.55

$

0.33

Diluted EPS

$

0.15

$

0.28

$

0.28

$

0.60

$

0.53

$

0.30

Total revenue increased 11% compared to the second quarter of 2021. We worked diligently to meet the surge in customer demand while successfully navigating global component supply constraints and logistics challenges.

Our non-GAAP gross margin was 40.8% in both the third and second quarter of 2021, as higher logistics and expedite costs were partially offset by a price increase on microinverters and cost management. Non-GAAP operating expenses increased to $57.3 million in the third quarter of 2021, compared to $51.7 million in the prior quarter, primarily due to additional investment in R&D and marketing programs, along with increased hiring. Non-GAAP operating income was $85.9 million in the third quarter of 2021, compared to $77.2 million in the second quarter of 2021.

We exited the third quarter of 2021 with $1.4 billion in cash, cash equivalents and marketable securities and generated $113.4 million in cash flow from operations. Capital expenditures were $12.7 million in the third quarter of 2021, compared to $16.4 million in the second quarter of 2021.

Strong demand for our microinverter systems continued in the third quarter of 2021, while shipments of our Enphase Storage systems increased approximately 51%, compared to the second quarter of 2021. Our Load Control feature gained significant adoption during the third quarter. This feature provides homeowners the ability to conserve their energy consumption by shedding non-essential loads during an outage and thereby extending the backup duration. We also made several software and hardware updates to reduce commissioning times.

Product innovation remains at the cornerstone of our growth strategy. Yesterday, we announced our all-new, all-in-one Energy System with IQ8™ solar microinverters for customers in North America. Since the company’s inception, we invested in custom application specific integrated circuit (ASIC) chips for our microinverters, and today we see the payoff with a software-defined microinverter smart enough to form a microgrid. Many homeowners often assume that their solar systems will function if the sun is shining, even during a power outage. This has unfortunately not been true until today. Now, with IQ8 homeowners can realize the true promise of solar — to make and use their own power. IQ8 solar microinverters can provide Sunlight Backup during an outage, even without a battery.

In addition, we recently announced that our home energy systems will soon integrate with most leading models of home standby AC generators, providing enhanced performance and a glitch-free transition for homeowners during power outages. Homeowners can also monitor real-time power flow, start and stop their generator remotely, set quiet hours to prevent their generator from operating until their batteries fall below a designated threshold, and control it all with the Enphase app. The new feature functions without a generator automatic transfer switch and eliminates the power glitches that reset home electronic appliances when switching to generator power.

We continued to make excellent progress on digital transformation. Both of our recent acquisitions achieved record revenue in the third quarter of 2021. Enphase Montreal, which provides design and proposal software, added a significant number of new installers. We plan to release several new software features next year to improve the installer experience. Enphase Noida, which provides proposal and permitting services, also experienced a significant increase in customer demand and is focused on automating the creation of permit plan sets to further expand the installer base.

BUSINESS HIGHLIGHTS

On Aug. 26, 2021, Enphase Energy announced that it renewed its partnership with Grid Alternatives, a national nonprofit providing access to clean, affordable, renewable energy, transportation, and jobs to economic and environmental justice communities. Enphase will continue donating its industry-leading microinverter technology as part of the partnership to help GRID achieve its mission of accelerating a rapid, equitable transition to a world powered by renewable energy.

On Sept. 21, 2021, Enphase Energy announced its participation in Hawaiian Electric’s Battery Bonus grid services program. The program offers a new incentive for homeowners on the island of Oahu who install a new home battery. Existing Hawaiian Electric net energy metering (NEM) customers enrolling in the Battery Bonus program are also eligible to add up to 5 kW of new solar capacity to their roofs without losing their existing NEM rate agreement, resulting in even more savings.

On Sept. 27, 2021, Enphase Energy announced it had entered the Brazilian solar market with the introduction of its IQ7+™ microinverters. Enphase started shipping IQ7+ microinverters for residential and small commercial installers across Brazil starting in Oct. 2021.

On Sept. 29, 2021 Enphase Energy announced that it further strengthened its presence in the European residential solar market with its expansion into Italy. Enphase is providing the IQ7™ family of microinverters, Q-Relay™ safety devices, and Enphase Envoy™ communications gateways, which connect Enphase systems to the Enphase Enlighten™ monitoring platform to residential installers across Italy.

On Oct. 18, 2021 Enphase Energy announced that it started shipping its Encharge™ battery storage system to customers in Belgium, further expanding the product’s availability in the European solar market. The Encharge battery storage system is also currently available to customers in Germany and North America. The Encharge battery storage system offers configurations ranging from 3.5kWh to 42kWh, along with the option to upgrade and expand through the lifetime of the system.

FOURTH QUARTER 2021 FINANCIAL OUTLOOK

For the fourth quarter of 2021, Enphase Energy estimates both GAAP and non-GAAP financial results as follows:

  • Revenue to be within a range of $390 million to $410 million, which includes shipments of 90 to 100 megawatt hours of Enphase Storage systems

  • GAAP gross margin to be within a range of 37.0% to 40.0%; non-GAAP gross margin to be within a range of 38.0% to 41.0%, excluding stock-based compensation expenses

  • GAAP operating expenses to be within a range of $119.0 million to $122.0 million, including $52.0 million estimated for stock-based compensation expenses and acquisition related costs and amortization

  • Non-GAAP operating expenses to be within a range of $67.0 million to $70.0 million, excluding $52.0 million estimated for stock-based compensation expenses and acquisition related costs and amortization. The non-GAAP estimates include increased investments in new products, software, and marketing, and a $3.6 million accrual for post combination expenses from prior acquisitions

Follow Enphase Online

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this press release. To view a description of non-GAAP financial measures used and the non-GAAP reconciliation schedule for the periods presented, click here.

Conference Call Information

Enphase Energy will host a conference call for analysts and investors to discuss its third quarter 2021 results and fourth quarter 2021 business outlook today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The call is open to the public by dialing (877) 644-1284; participant passcode 1167185. A live webcast of the conference call will also be accessible from the “Investor Relations” section of the Company’s website at investor.enphase.com. Following the webcast, an archived version will be available on the website for approximately one year. In addition, an audio replay of the conference call will be available by calling (855) 859-2056; participant passcode 1167185, beginning approximately one hour after the call.

Forward-Looking Statements

This press release contains forward-looking statements, including statements related to Enphase Energy’s expectations as to future financial performance, expense levels, liquidity sources, the capabilities, advantages, features and performance of our technology and products, including the ability to simplify and reduce installation time, our business strategies and anticipated demand for and availability of our products, the impact to homeowners, and the capabilities and performance of our partners. 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 certain risks and uncertainties including those risks described in more detail in the Company’s most recent Annual Report on Form 10-K and other documents on file with the SEC and available on the SEC’s website at www.sec.gov. Enphase Energy undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations, except as required by law.

A copy of this press release can be found on the investor relations page of Enphase Energy’s website at investor.enphase.com.

About Enphase Energy, Inc.

Enphase Energy, a global energy technology company based in Fremont, CA, is the world's leading supplier of microinverter-based solar and battery systems that enable people to harness the sun to make, use, save, and sell their own power—and control it all with a smart mobile app. The company revolutionized the solar industry with its microinverter-based technology and builds all-in-one solar, battery, and software solutions. Enphase has shipped more than 39 million microinverters, and over 1.7 million Enphase-based systems have been deployed in more than 130 countries. For more information, visit www.enphase.com.

Enphase Energy, Enphase, the E logo, IQ8, IQ7+, IQ7, Q-Relay, Envoy, Enlighten, Encharge and other trademarks or service names are the trademarks of Enphase Energy, Inc.

Contact:
Karen Sagot
Enphase Energy, Inc.
Investor Relations
ir@enphaseenergy.com


ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

Three Months Ended

Nine Months Ended

September 30,
2021

June 30,
2021

September 30,
2020

September 30,
2021

September 30,
2020

Net revenues

$

351,519

$

316,057

$

178,503

$

969,330

$

509,586

Cost of revenues (1)

211,161

188,256

83,522

578,222

285,543

Gross profit

140,358

127,801

94,981

391,108

224,043

Operating expenses:

Research and development

29,411

22,708

15,052

73,937

40,120

Sales and marketing

39,296

25,586

14,645

84,504

38,788

General and administrative

34,300

20,107

13,525

74,530

37,810

Total operating expenses

103,007

68,401

43,222

232,971

116,718

Income from operations

37,351

59,400

51,759

158,137

107,325

Other income (expense), net

Interest income

110

98

110

281

1,483

Interest expense

(12,628

)

(12,506

)

(5,993

)

(32,463

)

(15,100

)

Other income (expense), net

874

(633

)

(1,031

)

814

(1,302

)

Loss on partial settlement of convertible notes (2)

(13

)

(56,382

)

Change in fair value of derivatives (3)

(44,348

)

Total other expense, net

(11,644

)

(13,054

)

(6,914

)

(87,750

)

(59,267

)

Income before income taxes

25,707

46,346

44,845

70,387

48,058

Income tax benefit (provision)

(3,898

)

(6,995

)

(5,483

)

22,471

12,946

Net income

$

21,809

$

39,351

$

39,362

$

92,858

$

61,004

Net income per share:

Basic

$

0.16

$

0.29

$

0.31

$

0.69

$

0.49

Diluted

$

0.15

$

0.28

$

0.28

$

0.65

$

0.44

Shares used in per share calculation:

Basic

134,721

135,094

126,109

133,719

125,084

Diluted

141,220

141,533

141,820

143,091

140,207

(1) We sought refunds totaling approximately $39 million plus accrued interest on tariffs previously paid from September 24, 2018 to March 31, 2020 for certain microinverters that qualify for the tariff exclusion on Chinese imported microinverter products that fit the dimensions and weight limits within a Section 301 Tariff exclusion under U.S. note 20(ss)(40) to subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States. The refund request is subject to review and approval by the U.S. Customs and Border Protection; therefore, we have assessed the probable loss recovery in the three and nine months ended September 30, 2020 is equal to the $23.0 million approved refund requests available to us prior to issuance of the financial statements on October 27, 2020. As of both the three and nine months ended September 30, 2020, we have recorded $23.0 million as a reduction to cost of revenues in our condensed consolidated statements of operations as the approved refunds relate to paid tariffs previously recorded to cost of revenues, therefore, we recorded the corresponding approved tariff refunds as credits to cost of revenues in the three and nine months ended September 30, 2020.

(2) Loss on partial settlement of convertible notes of less than $0.1 million for the three months ended June 30, 2021, primarily relates to the non-cash loss on partial settlement of $0.1 million aggregate principal amount of the Notes due 2025. Loss on partial settlement of convertible notes of $56.4 million for the nine months ended September 30, 2021 primarily relates to the $9.5 million non-cash loss on partial settlement of $87.1 million aggregate principal amount of the Notes due 2024, $9.5 million non-cash loss on partial settlement of $217.8 million aggregate principal amount of the Notes due 2025 and $37.5 million non-cash inducement loss incurred on repurchase of Notes due 2025.

(3) Change in fair value of derivatives of $44.3 million for the nine months ended September 30, 2020, represents changes in fair value of the conversion option in the Notes due 2025, as well as the convertible note hedge and warrant transactions. Initially, conversion of the Notes due 2025 would be settled solely in cash as a result of the Company not having the necessary number of authorized but unissued shares of its common stock available to settle the conversion option of the Notes due 2025 in shares; therefore, the conversion option, convertible note hedge and warrant transactions were classified as derivatives that required marked-to-market accounting. On May 20, 2020, at the Company’s annual meeting of stockholders, the stockholders approved an amendment to its certificate of incorporation to increase the number of authorized shares of the Company’s common stock. As a result, the Company will now be able to settle the Notes due 2025, convertible notes hedge and warrants through payment or delivery, as the case may be, of cash, shares of its common stock or a combination thereof, at the Company’s election. Accordingly, on May 20, 2020, the conversion option, convertible note hedge and warrant transactions were remeasured at fair value and were then reclassified to additional paid-in-capital in the condensed consolidated balance sheet in the second quarter of 2020 and are no longer remeasured as long as they continue to meet the conditions for equity classification.


ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

September 30,
2021

December 31,
2020

ASSETS

Current assets:

Cash and cash equivalents

$

885,546

$

679,379

Marketable securities

508,577

Accounts receivable, net

273,012

182,165

Inventory

65,405

41,764

Prepaid expenses and other assets

35,541

29,756

Total current assets

1,768,081

933,064

Property and equipment, net

73,445

42,985

Operating lease, right of use asset, net

15,185

17,683

Intangible assets, net

43,146

28,808

Goodwill

61,038

24,783

Other assets

136,111

59,875

Deferred tax assets, net

133,158

92,904

Total assets

$

2,230,164

$

1,200,102

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

92,213

$

72,609

Accrued liabilities

139,243

76,542

Deferred revenues, current

59,232

47,665

Warranty obligations, current

16,728

11,260

Debt, current

86,039

325,967

Total current liabilities

393,455

534,043

Long-term liabilities:

Deferred revenues, noncurrent

177,249

125,473

Warranty obligations, noncurrent

50,784

34,653

Other liabilities

20,617

17,042

Debt, noncurrent

940,244

4,898

Total liabilities

1,582,349

716,109

Total stockholders’ equity

647,815

483,993

Total liabilities and stockholders’ equity

$

2,230,164

$

1,200,102


ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

Three Months Ended

Nine Months Ended

September 30,
2021

June 30,
2021

September 30,
2020

September 30,
2021

September 30,
2020

Cash flows from operating activities:

Net income

$

21,809

$

39,351

$

39,362

$

92,858

$

61,004

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

8,313

7,596

4,765

21,467

12,750

Provision for doubtful accounts

179

257

69

450

254

Loss on partial settlement of convertibles notes

13

56,382

Deemed repayment of convertible notes attributable to accreted debt discount

(6

)

(15,585

)

Non-cash interest expense

12,430

12,307

5,422

31,893

13,516

Change in fair value of debt securities

(784

)

(932

)

(3,153

)

Stock-based compensation

46,954

15,312

14,399

77,110

34,214

Change in fair value of derivatives

44,348

Deferred income taxes

1,337

5,240

5,060

(28,790

)

(14,507

)

Changes in operating assets and liabilities:

Accounts receivable

5,462

(44,812

)

(32,633

)

(93,069

)

23,533

Inventory

(27,648

)

(2,880

)

(6,349

)

(23,640

)

(5,479

)

Prepaid expenses and other assets

(3,568

)

(10,154

)

(917

)

(18,762

)

(10,451

)

Accounts payable, accrued and other liabilities (1)

24,897

10,514

26,189

71,787

(9,200

)

Warranty obligations

7,574

5,385

5,872

21,599

6,681

Deferred revenues

16,399

28,469

6,262

64,308

(24,509

)

Net cash provided by operating activities

113,354

65,660

67,501

254,855

132,154

Cash flows from investing activities:

Purchases of property and equipment

(12,682

)

(16,428

)

(3,903

)

(39,050

)

(11,707

)

Purchases of marketable securities

(545,490

)

(545,490

)

Maturities of marketable securities

35,000

35,000

Investments in private companies

(13,000

)

(20,000

)

(58,000

)

Business acquisitions, net of cash acquired

(55,239

)

Purchase of intangible asset

(250

)

(250

)

Net cash used in investing activities

(536,422

)

(36,428

)

(3,903

)

(663,029

)

(11,707

)

Cash flows from financing activities:

Issuance of convertible notes, net of issuance costs

(949

)

1,188,439

312,420

Purchase of convertible note hedges

(286,235

)

(89,056

)

Sale of warrants

220,800

71,552

Principal payments and financing fees on debt

(344

)

(636

)

(1,422

)

(2,269

)

Partial repurchase of convertible notes

(79

)

(289,312

)

Repurchase of common stock

(200,000

)

(200,000

)

Proceeds from exercise of equity awards and employee stock purchase plan

42

3,428

(138

)

3,684

4,708

Payment of withholding taxes related to net share settlement of equity awards

(3,313

)

(7,813

)

(8,390

)

(20,311

)

(52,042

)

Net cash provided by (used in) financing activities

(3,271

)

(205,757

)

(9,164

)

615,643

245,313

Effect of exchange rate changes on cash and cash equivalents

(376

)

(224

)

104

(1,302

)

(77

)

Net increase (decrease) in cash and cash equivalents

(426,715

)

(176,749

)

54,538

206,167

365,683

Cash, cash equivalents and restricted cash—Beginning of period

1,312,261

1,489,010

607,254

679,379

296,109

Cash and cash equivalents—End of period

$

885,546

$

1,312,261

$

661,792

$

885,546

$

661,792

(1) As of September 30, 2020, we have received $16.0 million of tariff refunds and accrued for $7.0 million tariff refunds that were approved, however, not yet received on or before September 30, 2020. As of both the three and nine months ended September 30, 2020, we have recorded $23.0 million as a reduction to cost of revenues in our condensed consolidated statements of operations as the approved refunds relate to paid tariffs previously recorded to cost of revenues, therefore, we recorded the corresponding approved tariff refunds as credits to cost of revenues in the current period. The tariff refund receivable of $7.0 million is recorded as a reduction of accounts payable to Flex Ltd. and affiliates (“Flex”), our manufacturing partner and the importer of record who will first receive the tariff refunds, on the condensed consolidated balance sheet as of September 30, 2020.


ENPHASE ENERGY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data and percentages)
(Unaudited)

Three Months Ended

Nine Months Ended

September 30,
2021

June 30,
2021

September 30,
2020

September 30,
2021

September 30,
2020

Gross profit (GAAP)

$

140,358

$

127,801

$

94,981

$

391,108

$

224,043

Stock-based compensation

2,915

1,060

1,294

4,957

3,237

Tariff refunds

(23,029

)

(23,029

)

Gross profit (Non-GAAP)

$

143,273

$

128,861

$

73,246

$

396,065

$

204,251

Gross margin (GAAP)

39.9

%

40.4

%

53.2

%

40.3

%

44.0

%

Stock-based compensation

0.9

%

0.4

%

0.7

%

0.6

%

0.6

%

Tariff refunds

%

%

(12.9

)%

%

(4.5

)%

Gross margin (Non-GAAP)

40.8

%

40.8

%

41.0

%

40.9

%

40.1

%

Operating expenses (GAAP)

$

103,007

$

68,401

$

43,222

$

232,971

$

116,718

Stock-based compensation (1)

(44,039

)

(14,252

)

(13,105

)

(72,153

)

(30,977

)

Acquisition related expenses and amortization

(1,627

)

(2,453

)

(546

)

(8,082

)

(1,638

)

Operating expenses (Non-GAAP)

$

57,341

$

51,696

$

29,571

$

152,736

$

84,103

(1) Includes stock-based compensation as follows:

Research and development

$

10,999

$

5,467

$

4,248

$

22,215

$

9,430

Sales and marketing

15,472

5,335

3,952

24,344

9,504

General and administrative

17,568

3,450

4,905

25,594

12,043

Total

$

44,039

$

14,252

$

13,105

$

72,153

$

30,977

Income from operations (GAAP)

$

37,351

$

59,400

$

51,759

$

158,137

$

107,325

Stock-based compensation

46,954

15,312

14,399

77,110

34,214

Tariff refunds

(23,029

)

(23,029

)

Acquisition related expenses and amortization

1,627

2,453

546

8,082

1,638

Income from operations (Non-GAAP)

$

85,932

$

77,165

$

43,675

$

243,329

$

120,148

Net income (GAAP)

$

21,809

$

39,351

$

39,362

$

92,858

$

61,004

Stock-based compensation

46,954

15,312

14,399

77,110

34,214

Tariff refunds

(23,029

)

(23,029

)

Acquisition related expenses and amortization

1,627

2,453

546

8,082

1,638

Non-cash interest expense

12,430

12,307

5,422

31,893

13,516

Loss on partial settlement of convertible notes

13

56,382

Change in fair value of derivatives

44,348

Non-GAAP income tax adjustment

1,337

5,240

5,060

(28,790

)

(14,507

)

Net income (Non-GAAP)

$

84,157

$

74,676

$

41,760

$

237,535

$

117,184


Net income per share, basic (GAAP)

$

0.16

$

0.29

$

0.31

$

0.69

$

0.49

Stock-based compensation

0.35

0.11

0.12

0.58

0.28

Tariff refunds

(0.18

)

(0.18

)

Acquisition related expenses and amortization

0.01

0.02

0.06

0.01

Non-cash interest expense

0.09

0.09

0.04

0.24

0.11

Loss on partial settlement of convertible notes

0.42

Change in fair value of derivatives

0.35

Non-GAAP income tax adjustment

0.01

0.04

0.04

(0.21

)

(0.12

)

Net income per share, basic (Non-GAAP)

$

0.62

$

0.55

$

0.33

$

1.78

$

0.94

Shares used in basic per share calculation GAAP and Non-GAAP

134,721

135,094

126,109

133,719

125,084

Net income per share, diluted (GAAP)

$

0.15

$

0.28

$

0.28

$

0.65

$

0.44

Stock-based compensation

0.34

0.11

0.11

0.55

0.26

Tariff refunds

(0.17

)

(0.17

)

Acquisition related expenses and amortization

0.01

0.02

0.06

0.01

Non-cash interest expense

0.09

0.09

0.04

0.23

0.10

Loss on partial settlement of convertible notes

0.40

Change in fair value of derivatives

$

0.33

Non-GAAP income tax adjustment

0.01

0.03

0.04

(0.21

)

(0.11

)

Net income per share, diluted (Non-GAAP) (2)

$

0.60

$

0.53

$

0.30

$

1.68

$

0.86

Shares used in diluted per share calculation GAAP

141,220

141,533

141,820

143,091

140,207

Shares used in diluted per share calculation Non-GAAP (3)

140,516

140,931

137,352

141,101

136,359

Net cash provided by operating activities (GAAP)

$

113,354

$

65,660

$

67,501

$

254,855

$

132,154

Purchases of property and equipment

(12,682

)

(16,428

)

(3,903

)

(39,050

)

(11,707

)

Deemed repayment of convertible notes due 2024 and notes due 2025 attributable to accreted debt discount

6

15,585

Free cash flow (Non-GAAP)

$

100,672

$

49,238

$

63,598

$

231,390

$

120,447

(2) Calculation of non-GAAP diluted net income per share for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, as well as the nine months ended September 30, 2021 and 2020, excludes convertible notes due 2023 interest expense, net of tax of less than $0.1 million in each period from non-GAAP net income.

(3) Effect of dilutive in-the-money portion of convertible senior notes and warrants are included in the GAAP weighted-average diluted shares in periods where the Company has GAAP net income. The Company excluded the in-the-money portion of convertible notes due 2024 totaling 46 thousand shares, 45 thousand shares and 4,468 thousand shares in the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively, and 1,014 thousand and 3,849 thousand shares for the nine months ended September 30, 2021, and 2020, respectively, from non-GAAP weighted-average diluted shares as the Company entered into convertible note hedge transactions that reduce potential dilution to the Company’s common stock upon any conversion of the notes due 2024. The Company excluded the in-the-money portion of convertible notes due 2025 totaling 658 thousand shares and 557 thousand shares in the three months ended September 30, 2021 and June 30, 2021, respectively, and 976 thousand shares for the nine months ended September 30, 2021, from non-GAAP weighted-average diluted shares as the Company entered into convertible note hedge transactions that reduce potential dilution to the Company’s common stock upon any conversion of the notes due 2025.