Good afternoon, and welcome to the Tigo Energy, Inc. Fiscal Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. Joining us from Tigo Energy, Inc. are Zvi Alon, CEO, and Bill Roeschlein, CFO. As a reminder, this call is being recorded. I would now like to turn the call over to Bill Roeschlein, Chief Financial Officer. Please go ahead.

Thank you, operator. I'd like to remind everyone that some of the matters we will discuss on this call, including our expected business outlook, our ability to increase our revenues and become profitable, and our overall long-term growth prospects, expectations regarding a recovery in our industry, including the timing thereof, statements about our demand for our products, our competitive position and market share, our current and future inventory levels, charges, and reserves, and their impact on future financial results, inventory supply, its impact on our customer shipments and adjusted EBITDA for the first fiscal quarter 2025 and a revenue for the first fiscal quarter and full year of 2025 and 2024. Our ability to penetrate new markets and expand our market share, including expansion in international markets, and investments in our product portfolio, are forward-looking and as such are subject to known and unknown risks and uncertainties, including but not limited to those factors described in today's press release and described in the risk factors section of our most recent annual report on Form 10-K and other reports we may file with the SEC from time to time. These risks and uncertainties could cause actual results to differ materially from those expressed on this call. These forward-looking statements are made only as of the date when made. During our call today, we will reference certain non-GAAP financial measures. We include non-GAAP to GAAP reconciliations in our press release furnished as an exhibit to our Form 8-K. Non-GAAP financial measures provided should not be considered a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. Finally, I would like to remind everyone that this conference call is being webcast, and a recording will be made available for replay on Tigo Energy, Inc.'s investor relations website at investors.tigoenergy.com. With that, I'd like to now turn the call over to Tigo Energy, Inc. CEO, Zvi Alon.

Thank you, Bill. To begin today's discussion, I will highlight key areas in our recent performance to wrap up the past year and provide some commentary on recent operational highlights before turning the call over to our CFO, Bill Roeschlein. He will discuss our financial results for the fourth quarter in more depth as well as provide our guidance for the first quarter of 2025 and the full year of 2025. After that, I will share some closing remarks, tell you about our outlook for the year 2025, and then open the call for questions from our analysts. Let's get started. I'm pleased to report that we ended 2024 with yet another sequential quarterly revenue growth, making it four out of four for the fiscal year. Given how 2023 ended, I'm exceptionally proud of what our team at Tigo Energy, Inc. has managed to accomplish. To give some geographical color on the results, we saw positive sales growth, especially within the EMEA and Americas regions during the quarter. Expanding our sales footprint into markets and doubling down our efforts in key markets has remained an area of focus for us. To share only a few recent highlights, our team has spent time in Malaysia and Hawaii to educate, train, and sell our product portfolio. In the fourth quarter of 2024, we shipped 480,000 MLP units, bringing the 2024 MLP shipped total to 1.5 million units. Our momentum in the marketplace is strong, and we expect this trend to continue in 2025. Additionally, we achieved multiple utility-scale wins in 2024, and our pipeline in this sector of the market continues to grow. Another key focus area is within our AI software solution, where our Predict Plus AI-based energy consumption and production platform continues to grow. We announced yesterday that since the first quarter of 2024, the Predict Plus platform has grown from 15,000 to 140,000 meters under management and covers a total of 600 gigawatt-hours of energy at year-end. As Predict Plus expands into Europe and North America, we are bringing machine learning to energy analytics and predictions to a new standard for energy forecasting. Our annual recurring revenue, or ARR, now stands above $1 million per year, and we expect it will continue to grow in 2025. Additionally, we just recently announced another great milestone. Since the inception of the program, GreenGlobe has now reached 1,000 site engagements globally, including over 700 C&I installations and over 300 residential solar installations. We are excited to see our efforts towards total quality solar starting to pay off. And with that, I would like to turn it over to Bill. Bill?

Thank you, Zvi. Before I start reviewing the results of the fourth quarter, I would like to address the inventory reserve charges that are significantly impacting many line items in our income statement as they're accounted for in the cost of revenue. In 2024, our Go ESS storage and solutions business represented 6% of total sales compared with 9% of total sales in the prior year. Reflecting the fact that this business line has not participated in our business recovery as well as we had anticipated. As you may be well aware, this segment of the market has many market participants competing for market share, and battery prices, in particular, continue to fall at a significant rate, all of which negatively impacts companies holding high inventory positions. As mentioned in our previous earnings call, the charges taken in both the third and fourth quarters reflect management's estimate of the inventory's net realizable value and incorporate current and future expectations of the market environment. Now turning to the financial results for the fourth quarter ended December 31, 2024. Revenue for the fourth quarter of 2024 increased 86.8% to $17.3 million from $9.2 million in the prior year period. On a sequential basis, revenues increased 21.3%, with improved results coming from many countries in the EMEA and Americas regions, including the US and Germany, along with some recovery in Italy. By region, EMEA revenue was $11.2 million or 65% of total revenues, and a 29.3% sequential increase. Americas revenue was $4.6 million or 27% of total revenues, a 57.2% sequential increase. And APAC revenue was $1.5 million or 9% of total revenues and a decline of 44% sequentially. Gross loss in the fourth quarter of 2024 was $12.6 million or negative 72.7% of revenue compared to a gross profit of $2.9 million or 31.1% of revenue in the comparable year-ago period. The year-over-year decline was primarily due to the previously mentioned inventory charge of $19.5 million. Operating expenses for the fourth quarter declined 29.8% to $11.6 million compared to $16.4 million in the prior year period. The decline was driven primarily by our previously announced cost-cutting efforts. Operating loss for the fourth quarter increased by 77.9% to $24.1 million compared to $13.5 million in the prior year period. GAAP net loss for the fourth quarter was $26.8 million compared to a net loss of $14.8 million in the prior year period. But we recorded a higher net loss on a GAAP basis for the fourth quarter compared to the prior year period, absent the inventory charge, our results reflect progress towards profitability on a non-GAAP basis. Adjusted EBITDA loss in the fourth quarter increased 90.4% to $22.1 million compared to an adjusted EBITDA loss of $11.6 million in the prior year period. As a reminder, adjusted EBITDA is a non-GAAP measure that represents net loss as adjusted for interest and other expenses, income tax expense, depreciation, amortization, stock-based compensation, and M&A transaction expenses. Primary shares outstanding were 60.8 million for the fourth quarter of 2024. Turning to the balance sheet, accounts receivable net decreased this quarter to $8 million compared to $8.8 million last quarter, and increased from $6.9 million in the year-ago comparable period. Inventories net decreased by $24.8 million or 53% to $22 million compared to $46.8 million last quarter and $61.4 million in the year-ago comparable period. Cash, cash equivalents, and short and long-term marketable securities totaled $19.9 million at December 31, 2024. On a sequential basis, cash increased by $400,000 as we continue to make progress on reducing our inventory and working capital. Turning now to our financial outlook for our first quarter of 2025 and full year of 2025. As a reminder, Tigo Energy, Inc. provides quarterly guidance for revenue, as well as adjusted EBITDA, as we believe that these metrics are key indicators for the overall performance of our business. For the first quarter of 2025, we expect revenues and adjusted EBITDA to be in the following range. We expect revenues in the first quarter ended March 31, 2025, to range between $17 million and $19 million. We expect adjusted EBITDA loss to range between $2.5 million and $4.5 million. For the full year of 2025, we expect revenues to range between $85 million and $100 million. That completes my summary. I'd like to now turn the call back over to Zvi for final remarks.

Thanks, Bill. As we look ahead, I can say that the industry still faces headwinds, but our track record over the past year, 2024, makes us believe that our vast portfolio of solutions allows us to mitigate the industry and market pressure better than others. As demand for our solutions continues to return, we expect revenue to increase steadily throughout the remainder of 2025. After four quarters of sequential top-line growth, we believe we have enough visibility into what's ahead for the company to carefully provide an outlook for the full quarters ahead of us. We anticipate that our quarterly revenues will continue to improve throughout 2025. We firmly believe in the growth prospects of our business and look forward to providing additional updates in the coming quarters. With that, operator, please open the call for Q&A.

At this time, please press star one one on your telephone. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Eric Stein with Craig Hallum Capital Group. Your line is open.

Hi, it's me. Hi, Bill.

Hello. Hi. Hello.

So maybe just on the adjusted EBITDA, I know you called out the charge of $2.6 million. Can you just remind when you previously guided, were you expecting or factoring a charge into that? Just noteworthy that at the midpoint excluding the charge, you outperformed by $5 million.

Yeah. Correct. In the last call, we did say in our guidance that the EBITDA guidance reflected an expectation of additional inventory reserves. That being said, the amount of the inventory reserve ended up being higher than we had initially anticipated during that call. But we feel that the reserve taken is both adequate and necessary as we move forward.

And sticking with the charge, I mean, do you feel like this covers it? I mean, you're not expecting, I mean, I guess from the guide, it would imply that you're not expecting a charge in Q1 at least.

Right. So, yes, as part of the annual audit, you know, obviously, a review process. We have to look at the balance sheet in terms of valuation. And at this point, with the reserve taken, we've reserved 90% of the energy storage solutions business inventory. We're left with a net book value somewhere in around the $2.1 million range, which we think is adequate and justified given what we expect to sell.

Got it. Okay. That's helpful. And then, you know, just looking at OpEx, looks like it came down a little bit more. You know, I'm just curious as you think about fiscal 2025 guidance. And maybe where you are exiting the year. I mean, do you have, I know in the past, you've given some quarterly revenue targets for cash flow positive and EBITDA positive. Are those things that you are able to update on this call?

Yes. Certainly. So in general, we look to keep the cash OpEx, which is looking at the OpEx and taking out the EBITDA adjustments, stock-based compensation, and amortization, depreciation to come up with an OpEx number that is sub $10 million. In this past quarter, it was around a little bit less than $9.5 million. There is going to be a little bit of lumpiness with Q1 where we have the annual audit and expenses related to that, and then we have some ebbs and flows as it relates to some litigation expenses. But we believe that after Q1, we are able to take the OpEx further down somewhat, and with some assistance with the OpEx being lower, along with kind of not having the continual drag of reserving inventory, which if you recall in Q1, Q3, and Q4, we had reserves. And so for primarily for the Go ESS solutions product, absent that, our margins were, you know, mid-thirties to Q4 was actually 40%. So taking that forward, our outlook for breakeven EBITDA is more like $25 to $28 million at that mid-thirty to high-thirty percent gross margin range. And our guidance of $85 million to $100 million is, you know, 8.5% to 15.5% sequential growth, which is fairly consistent with what we've delivered thus far. If you recall, Q2 is about 30%, Q3, 12%, Q4 21.3%, and so within that range, we expect second-half profitability on an adjusted EBITDA basis, and you can see that at the low end $85 million, that would suggest somewhere more like late Q3, Q4, but the high end, that could be Q2, Q3. If you want to take the midpoint of the guidance, we would still expect to see EBITDA profitability in the second half, Q3 to be specific, it would be based on our business model going forward, which is $25 to $28 million with mid-thirties margins, and that's what we're tracking to and that's also what we've been delivering in these past two quarters.

Okay. That's great. Thanks a lot.

One moment for our next question. Next question comes from Philip Shen with Roth Capital Partners. Your line is open.

Guys. Thanks for taking the questions. First one is on the 2025 guidance. Can you share what you expect the geographic mix to be? I know for Q4, it was roughly two-thirds EMEA and then Americas 27% and then APAC 9%. Would you expect that to maintain as we go through the year?

So the answer is in general, the answer is absolutely yes. In the 65% to plus for EMEA and in the 30% give or take for North America. We've seen, as I said before, we've seen an increase in those two regions also in the last quarter.

Okay. Thank you, Zvi. And then in terms of EMEA, I think on the last call, you talked about the top three countries being Germany, Italy, and the UK. What were the top countries in EMEA for you in Q4? And then as we go through 2025, what would they be? Thanks.

It's pretty much the same. It's Germany, the UK, and Italy. We have not seen any recovery in the Netherlands as an example. We do see some interesting activity in Eastern Europe. But the main top three countries are Germany, number one, and the UK, and Italy.

Got it. And so what is your outlook for each of these countries overall? Our sense is Germany might be a little bit flattish. I think WoodMac was sharing with us in a recent webinar that it could be down 5% in 2025. After being down 20% in 2024. So but they do see Germany being down significantly in 2026 and beyond. So Germany being such a big segment or kind of slice, how do you how would you expect to navigate that? Maybe you disagree with the WoodMac team as well. So can you share your outlook for these countries? Thanks.

We actually see in Germany a robust market. And it continues to be strong for us. The indications we are getting from the distribution is that at the level that we have been running, and they maintained that they see the same continuing for the rest of the year for us. And also the other side, which is also impressive for us, is the UK. The UK is really coming very strong for us.

Great. Okay. Thanks. And then in terms of the US outlook, there have been, there's a big debate on Powerwall 3 and the ramp-up and how that can take share from inverters and storage companies. And so I was wondering if there is an opportunity for you to pair your optimizers with the internal Powerwall 3 inverter. So have you is that, I mean, is that something that is workable now and is that an opportunity for you? I see with the section 48E rules, that require separation to get the domestic content matter for solar and storage, it seems like there could be something there for you guys. What are your thoughts?

Yes. I can tell you we have seen an increase in requests from customers to go with the Powerwall 3. To use it with our product. And so we are paying attention to it and we are doing our best to make sure that we obviously comply with Tesla. To support it. And we do have a good number of installations already with Powerwalls. So we know that in the market, it's actually working well. And we will see how it continues.

Okay. So are you being paired up with your fire safety device, or is it more your optimizer or?

Actually, the optimizers. Actually, it's a higher-priced unit.

Great. Okay. Yeah. Are you able to, are you qualified to work with the Tesla inverter only? Products?

We have the installations. You mean the Powerwall 2? Yes.

No. Meaning, Tesla also sells an inverter. That is 7.00. And so I was wondering if you were able to be matched up with that.

So the answer is yes. We can. The optimizers can.

Okay. Good. So you know, that is maybe an opportunity now that there's, you know, the section 48E requirement to separate solar and storage. Again for domestic. Yeah. So great. And then shifting, can you share, you think you've talked about the Predict Plus and the opportunity there and that that's growing for you. Most of your business historically has been DG. Distribution. And so when you think about your revenue mix for 2025, what is the split between utility-scale solar and DG? My guess is Utility Scale Solar is a very small percentage, maybe sub ten, five-ish or so. But was wondering if you think that can grow to a much bigger percentage in the near term. Thanks.

So as I said in my remarks, we have seen an increase in large-scale installations. And the two we mentioned were the 142 megawatt in Spain, which used 100,000 follow devices, and we also announced another very large scale, 97,000 devices in Brazil. And we don't even release any information or assistance with JND ten, fifteen, twenty megawatts and above. We do see an increase in demand and requirements for those larger systems, I don't want to yet predict percentage-wise for the total, but I can tell you it is becoming a more significant component for us. And this is true, not just in the US and Europe. We've seen most of our installations in Asia Pacific, the majority are CNI and small utility-scale systems. And these are direct sales. Right? This is not through distribution? The majority of direct sales, sometimes we do deliver to the, but the majority of direct sales.

Okay. And then is the margin profile of the direct sales comparable to your sales in the distribution, or is it a little bit lighter given the volume? That's fine.

So what's beautiful about our product, Phil, is that it's the same product that we sent to the residential and to the large systems, and our pricing is not changing. It's the same. Actually, we've kept this price of the unit equal for the last four, five years. We didn't change it. We didn't close the price of our product.

Okay. Well, look forward to following that story as well. Thanks for taking my many questions. I'll pass it on.

Thank you.

One moment for our next question. Our next question comes from Sameer Joshi with HC Wainwright. Your line is open.

Hey. Good afternoon, Zvi. Many of my questions have been answered, but just digging a little bit into the gross margins. I think, Bill, you did mention in response to one of the questions that probably your fourth-quarter gross margins were over 40%. And so going forward, do you expect that level of margins? Because I think you guided mid-thirties as during the commentary as well. Just was wondering whether 40 was sort of because of some kind of a product mix or some other reason.

Yeah. I think between 35 and 40 is where we're tracking. You know, one quarter doesn't make for a trend, but, you know, Q3 again, ex-reserve was 36.5, Q4 ex-reserve was 40.2. So we are there our trend and our product set is set up for that mid to upper thirties figure. And so we're comfortable with that range. The inventory reserve that we've had to take over the past few quarters, you know, have dampened that and eliminating uncertainty around that helps to better explain what the underlying margins should be like, and that's where they are.

Understood. And then a larger picture, you have given guidance for 2025. And maybe we can understand the 1Q guidance you probably have very, very good visibility on that. But for the year, what is the level of your confidence, and what areas are you looking at when you're looking at this buildup? Let me build up.

Yeah. So, you know, we've got four quarters behind us here of sequential growth. And coming out of the downturn, in Q1, we had 6.5% growth. You know, Q2, 29.6%, Q3 12.1%, Q4 21.3%. So, you know, we're giving a conservative or realistic range here of a low point of $85 million being 8.5% sequential growth. Up to $100 million being 15.5%. So just look at what we've done over the last four quarters, you know, you can see that I think we've done our best job to incorporate, you know, the high probability of outcomes in 2025. And the book of business continues to remain strong for us, and so, you know, we've got confidence that the range we're providing is a good range.

Got it. And this one last one, is there any impact likely impact of any tariffs that might materialize over the next few quarters that will impact your margins.

So that is a you never say never question. But we moved our production for the most part, a lot of it to Thailand. Back in 2017, 2018 when we went through version TRUMP version one, and we have not had any indication that any of our products would be targeted in any way. At this point? So best I can answer is that way.

Got it. Thanks for taking my questions, and congrats on the progress.

Thank you.

At this time, this concludes our question and answer session. I'd like to turn the call back over to Mr. Alon for his closing remarks.

Thanks again everyone for joining us today. I especially want to thank our dedicated employees for their ongoing contribution as well as our customers and for their continued hard work. I also want to thank the investors for their continued support. Operator.

Thank you for joining us. Thank you for joining us today. Thank you for joining us. Well, one moment. We do have another person in the queue for a question. Next question comes from Gus Richard with Northland. Your line is open.

Yes. Thanks for asking. Thanks for letting me ask questions. Sorry to be at five o'clock, Charlie. Just real quick on the gross margins. I think that's a record for y'all, and I just was wondering, you know, what drove such strong performance in gross margins in the quarter?

There's a couple points. You know, we continue to improve our cost on our product. And so a lot of work continues to go into costing down the cost of the product and we're continuing to expand margin. Not just a continual process that we do, yeah. We've introduced the X as well, and the X provides a very healthy margin. And so the family of TS4 for us is just on a variable basis, very attractive margins. And so when you get a quarter where you're selling most of, most product is these TS4s, you're gonna get the high margins that you're seeing here.

Got it. And then you know, you recently signed a, you know, we got on an approved vendor list that large company. And I'm just wondering is some of the visibility that you're getting just channel sales for that customer or, you know, I'm just just wanna sort of wrap my mind around, you know, the visibility for the full year given how dynamic the environment is. So.

Our visibility, I guess, if we talk about EMEA, is coming from the three countries I mentioned with the very strong distributor and very sizable distributors there, which provides us confidence as far as the continuation. Obviously, we've seen also an increase in footprint in the US, and, no, we did not rely just on this last one we signed. Even though it will be a contributor as it evolves and continues to grab additional footprint within our offering. But my point is that the visibility is not just based on that one.

Got it. And then just last one for me. In terms of sell-in versus sell-out and, you know, the health of the channel, can you just comment on what you see geographically?

I can tell you that I believe that 100% of all the orders we received the last two plus quarters are brand new into inventory, which is getting depleted almost in no time. So we don't have much leftover or any additional inventory in the channel.

Okay. Alright. Thank you for squeezing me in. Sorry. Again, for being late.

Most welcome.

Mr. Alon, were you all finished with your closing remarks?

Yes. I am.

Okay. Well, I just want to thank everyone for joining us today for Tigo Energy, Inc.'s fourth quarter 2024 earnings conference call. You may now disconnect, and have a wonderful day.