Vikram Bagri: Thanks Badri. And as a follow-up, I wanted to quickly follow up on the capital allocation question earlier in the call. I was wondering if your priorities have changed given where the stock price is today. I see you repurchased about $110 million in shares versus $122 million of free cash flow this quarter. Should we expect similar trend going forward, share buybacks closely following free cash flow generation in quarters?
Badri Kothandaraman: Yes. Well, I mean we have a lot of cash like what you pointed out, $1.8 billion. We have shown that we are willing to buy back stock in a disciplined fashion. We have bought back stock in the last couple of quarters. I think we have bought back $310 million in total, $110 million in Q3 and $200 million in the prior quarter. I think this is an opportunistic time for us where we can take advantage of the stock price. So we will be opportunistic about it.
Vikram Bagri: Thank you very much.
Badri Kothandaraman: Thank you.
Operator: And our next question will come from Praneeth Satish with Wells Fargo. Please go ahead.
Praneeth Satish: Thanks for squeezing me in here. Long call. I guess I wanted to ask about Tesla’s new Powerwall [Ph] 3 offering and maybe what are kind of the puts and takes there comparing that against your IQ8 and 5P battery. And I guess, do you anticipate any market share changes when this product is launched next year?
Raghu Belur: This is Raghu. And Badri mentioned earlier on, look, competition is not new to us. And any company out there that’s doing string inverters, we have been competing against those since the inception of the company, and we have a very, very strong value proposition against that technology, a technology that we’ve been fighting against since 2008. So if you think about it, if you break it down, we just produce more energy. We do maximum power point tracking on a per module basis, right, because we have — we do power conversion right at the module itself. We are much more reliable. We don’t have a single point of failure, that’s a true value of the distributed architecture. So even if one of our micros or the module or to — were to fail or get impinged on energy, the rest of the system continues to operate.
String inverters on the other hand, are a very significant single point of failure of that string inverter would fail, our entire system is dead. Again, if you look at also design, installation and maintenance, we don’t have string designs anymore. Like those string designs are a thing of the past, those things went away in 2012. And with us, you don’t have to do any stringing, no string design, no limitation, steady, can put as much new modules or just like, installations, all plug-and-play. And maintenance, we provide you with per module information, right? And with the traditional string inverters, you’re completely blind to how your modules are performing. So I think that’s going backwards. And finally, and arguably one of the most important elements of it, is safety, right?
You want to do — you don’t want any high-voltage DC anywhere in the system. And so with Enphase, we are all low voltage DC, we are traditional AC. And the combination of high-voltage DC and high-energy chemistry is probably not very optimal. And on the reliability front, we mentioned, one is system-level reliability, which is not having a single point of failure. But look, a unit itself is extremely reliable. We offer a 25-year warranty compared to other types of technologies that offer 10 year, 12 year warranties. And on the battery, if you break the battery down as well, modularity is extremely important. You don’t need to have very large batteries and you have the — where we are building block is fast over ours. So you can right size the system to exactly what homeowner needs.
But we mentioned the higher power of our third-generation battery or IQ battery 5P, the high sea [Ph] rate of the battery is really is an economic benefit to the homeowner because you can export significant amounts of power during those times of the day or those times of the hour where you get compensated by the utility for exporting energy. And finally, on safety, we use lithium iron phosphate, LFP chemistry, right? LFP chemistry is arguably much safer than any other chemistry that’s out there. Put all that together, look at it in the totality of the system, right, all the software that we provide, the design tools that we provide, those are the competitive moats against any other technology that is out there. Now couple that with our customer service, right?
We are open 24/7. Our customer service department is open 24/7. We — the installer can call us at any time. The homeowner can call it. They have beautiful app where they see their solar, their batteries. Now even there with the connected EV charger, they’re seeing how the EV is doing. If you have a VPP program right from the app itself, we can sign up for the VPP program. We really bring a comprehensive solution that is completely differentiated, distributed architecture on inverters, the battery arguably one of the safest batteries, connected EV chargers and a complete system solution for the homeowner and of course, a great customer experience. So take any — we have a very competitive solution. And like I said, competition is not new for us at all.
Praneeth Satish: That’s very helpful. I guess, just quickly switching gears to California. I just wanted to — you mentioned that you’re educating installers about NEM 3.0, the payback is 6 years, maybe down to 5 years with some of these rate increases. You’ve got the Solargraf software where you’re kind of automating a lot of the calculations for installers. But despite all this, and it all sounds good on paper. But despite all this, that the permits are just — they’re moving down week on week, right, in the wrong direction. So I’m just trying to understand if there’s anything else you can do to simplify the process and help convert some of the leads to signed contracts? Or is it just — is it rates? Or is it just waiting for time, waiting for just macro to improve a bit?
Raghu Belur: It start waiting, right? It’s our — we have to go out there. And we and the rest of our industry needs to get out there and continue educating our installer partners, helping our install partners, educate the homeowner, that’s what it’s going to take. And I think all the tools are there, everything is ready. But most importantly, the economics are there, right? It’s simply getting in front of the homeowner, getting and convincing them, showing them the numbers, showing them using a tool like Solargraf and showing them what a solar install of the house would look like, the size of the battery that they would require and then showing them the payback period that it’s anywhere from 5 to 7 years and getting better at utility rate continues to improve.
So I think we are all doing the right things. We are getting out there and key same phase, we are getting out there and I’m sure our competition is also getting out there and educating both installers and customers and so we expect — yes, we expect it’s simply a matter of time. I think you’ll see — you’ll see the California market turnaround as well.
Praneeth Satish: Thank you.
Operator: This concludes our question-and-answer session. I would now like to turn the conference back over to Badri Kothandaraman for any closing remarks.
Badri Kothandaraman: Yes. Thank you for joining us today and for your continued support of Enphase. We look forward to speaking with you again next quarter.
Operator: The conference has now concluded. Thank you very much for attending today’s presentation. You may now disconnect your lines.
