What happened

Shares of Enphase Energy (ENPH 6.54%) are rising today, up by 2.6% as of 12:25 p.m. EDT, which was actually a pretty modest gain considering the size of the earnings beat this solar microinverter maker just delivered.

Heading into Enphase's second-quarter report, analysts had predicted that the company would earn only $0.43 per share (pro forma) on sales of $311 million. As it turned out, Enphase beat on both the top and bottom lines, with sales of $316 million and $0.53 per share in profits.  

Solar inverters behind a row of solar panels in bright sunshine.

Image source: Getty Images.

So what

When calculated according to generally accepted accounting principles (GAAP), Enphase's numbers weren't quite as good as those pro forma figures suggest, and that may be part of the reason Enphase's stock price isn't getting the gains it might have otherwise.

Sales in Q2 grew an astounding 252% year over year, which was a clear win for Enphase. GAAP profits for the quarter, however, were only $0.28 per share -- still a 27% increase over last year, but a whole lot less than $0.53. Also, gross profit margin rose 190 basis points year over year. But at 40.4% in Q2, that margin actually declined 30 basis points from the first quarter.

Now what

Enphase intends to continue growing in Q3, but at a slower pace -- and that may also be keeping a lid on the stock's gains today.

Enphase said its sales in the coming quarter should range from $335 million to $355 million -- up about 1.5% from Q3 2020, and slightly above analyst expectations. Gross profit margin, however, will move into reverse, continuing to fall below 40%, and perhaps as low as 37%.

Although management didn't give guidance for Q3 earnings, that seems to suggest that they'll be little better than what Enphase earned in the second quarter -- and quite possibly worse.