Okay, we are ready to begin our next presentation. let's please give a warm welcome to the Chairman and CEO of Tigo Energy, Zvi Alon.
Thank you very much. Thanks for joining. I am going to take you on a journey, a solar journey here in the next few minutes, and then I'm going to ask Bill, our CFO, to come up and spend some time talking about the numbers themselves. Let me just move forward. We obviously need to have disclaimers. If you didn't read all of it, there will be a test at the end. We are essentially a company that provides the components that make the solar systems more efficient, generating more energy, secure, and provides you the eyes to see what's going on. When you have small installations like this house, particular house, our products, by the way, are positioned behind the PV modules, so people don't see it in most cases.
When you have a small system like that, and there is a problem, to identify the problem is very simple and easy. We have systems with 10,000 PV modules, 20,000 PV modules, and we just installed and finished installation of a system with 250,000 PV modules. Identifying a problem without knowing where it is is a problem, and it's, you can spend many, many hours and money. Our system provides the monitoring capability to allow you to detect where is the problem and being able to actually address it. Some of the highlights, we are a leading supplier of what's known as MLPE, Module-Level Power Electronics, which I just described in the picture, resides behind this, the panel.
Globally, we are installed in over 120 countries, and we have a certification pretty much in most jurisdictions in the world. We have seven installations in seven continents. We have distributors all over the world. We've entered the market with also storage solutions, which I'm going to get into later on. We are growing market share in a market which is a bit challenged but still very strong future possibilities. We finished last year with $103 million in sales, and we've provided some guidance to this year for +$130 million in target, and obviously adjusted EBITDA has been positive, and we generate cash right now. Just to give you an idea. We are public.
We are listed on Nasdaq, TYGO, just so you have some idea. Market is expanding. The market keeps on growing globally. Actually, in the last several years, the generation of energy from solar is by far the most cost-effective out there. We see the proliferation of those markets. The market is divided to three major segments. There is the residential, there is the commercial, and then there is the utility side. In different jurisdictions, different countries, different places at different times, something sometimes can be either challenged or a positive. The fact that we have a wider distribution of our footprint globally gets us a little bit more immune to those situations. Again, about our solution.
On the left-hand side, the far left-hand side, you see the PV modules, which are normally on the roof or ground mount, and that's what most people know when you drive and you see solar panels. It's very recognizable icon. On the right-hand side, there is the grid, the wires of the power that gets distributed globally. In between, we sit, and we have the MLPE, which are those devices that I mentioned before, which provide the monitoring, safety, and optimization capability to increase the power. The center is a storage solution. Predominantly, we service the residential market in Europe and in the U.S. It's a composition of an inverter, a battery, automatic transfer switch, electric vehicle charger, and others.
On the right-hand side, we have a fairly strong AI-based software that allows the customers to predict consumption and production of energy. The difference between being able to predict properly the consumption and production is whether you make money or you lose money. It's really very simple. You either produce too much, and you are unable to sell it, or you're producing too little, and you're not making enough. That's what it is. On the MLPE, we have several unique capabilities and features related to the MLPE. We've shipped 10 million plus units, and we have them installed globally. We have a very low failure rate. Our failure rate is 0.25%, so it's fairly low. Our products are open system. They work with pretty much any inverter in the world.
We have over 1,000 inverters in our database, and they've been tested and certified with many. Actually, yes, basically. We have an average improvement of energy generation of close to 9%, which is very high in the market. Just to give you an idea of the installations, since our products are fairly widely used, the same identical product services the residential, the commercial, or the utility scale market. On the top right-hand side, you see a picture of a house in Australia. Because of the trees around, they decided to use optimizers to address the shade- issue mitigation on the PV modules. When you have shade on some panels and not on the others, the production changes.
You will get the most production out of the weakest link, and that will be setting the maximum capability of generating energy. They opted to use that. On the center picture, commercial installation here in California, it's a very critical aspect for them to have power available all the time. It happens to be a distribution center. They installed a 0.5 MW on the rooftop, and they used our capability to make sure that they see if there is any variation to the production of the energy. In the event they do, they are able to deal with that production deficiency capability. On the bottom part, you have a very large utility scale, happens to be a floating system in the Golan Heights in Israel.
It has about 30,000 PV modules, and obviously when you get electricity and water, they don't like each other sometimes, so safety is very critical. They installed the safety capability of our product. Again, to explain how that same product goes to all the different markets. We've I mentioned that we have solutions for the residential storage market. We just actually introduced two new additions of storage to batteries, both in Europe and in the U.S. It's composition of an inverter, a stack of batteries, and also all the other capabilities to transfer automatically in case there is a power failure to the backup and vice versa. Last but not least is the energy generation from those systems is being monitored. It is being shown on a browser or on your mobile application.
You can see on the right-hand side that the map of the various panels represents the layout of those panels in the background on the roof itself, and the shade of the green on those panels, or if it becomes black or gray, tells you what's the status. The more energy it gets to generate, the higher the energy production of this one specific panel. You can see actually that, if you have our monitoring system, since the granularity of the check of the data is so high, we collect the data in increments of seconds, you can actually see movements of the cloud or even planes flying over the system that you have installed. In smaller systems it makes less of a difference, but in larger systems it does. It's a very high granularity in data.
Last but not least is the prediction capability. We have several customers who are using our products, about 20 customers, who are able to actually increase their ability to generate cash. We actually helped one of our customers save millions of dollars in being able to know that delta between the consumption and production of the systems. Advantages of us, we have several capabilities. First of all, our MLPE products are open system and similarly our storage. You can mix and match different suppliers if you want and use us with pretty much any inverter and every PV module. Similarly, on the storage solution, you can take our battery or any other battery if you wish to connect them. They don't need to be also all from the same supplier, and all take inverters from different suppliers.
We are really open. Exceptionally high reliability, as I mentioned before, 0.25%. We have the architecture that is the most efficient, meaning it generates the majority of the energy out of the panel and does the least losses compared to any other architecture which is available out there in the market. We have a fairly strong patent portfolio that is supporting us. With that, I would like to ask Bill to join me here.
Thank you, Zvi. We went public via de-SPAC in May of 2023. We had two years of substantial 80% growth in both 2022 and 2023. The industry, as the COVID restrictions ended, everybody overproduced, and you had basically a flood of inventory that was stuck in the distributor channel, which is our main channel of selling product. 2024 was a year of digestion for the industry. In 2025 we had a subsequent recovery, going from $54 million- $103.5 million. We're now solidly back on that growth trajectory. We've given guidance of $130 million-$135 million for the year.
Tailwinds that, you know, for us are growth in just the industry, our market share gains as an agnostic supplier of MLPE, new products that we've introduced, for instance, the hybrid inverter and the battery products, expansion into new countries, further penetration into Europe and into parts of Asia and South America. All those have been playing in our favor and have allowed us to achieve outsized growth that's in excess of what our competitors have been able to do. We've experienced along the way multiple quarters of sequential revenue increases. Q4 is typically the lowest point for us given that the weather is cold and it's hard to install solar, especially in Europe when it's snowing.
The guidance that we have given for the upcoming quarter is a lot higher than the previous quarter. Our gross margins have been steady in the 40%+ category. Our target margin is 40%± . It'll depend on the product mix. In general, you have the MLPE having very high margins, upper 40%s, inverters slightly lower and batteries being the lowest given the competitive nature of that particular industry. Operating expenses have been relatively flat. They have ticked up a little bit here to that $13 million level where we expect them to stay for the balance of the year. As we grow the top line, maintain good cost controls on the OpEx line.
Our model allows us to let that fall to EBITDA and net income. We've had multiple quarters now of cash flow positive, operating profit, EBITDA positive. Last quarter was flattish given the weather situation. We've guided the current quarter is another positive quarter. We also, you know, expect our non-GAAP EPS to flip positive this year. It was positive as well in the prior year. The financial picture looks very strong and promising for our company and our industry. Our target models for those who are interested are 40% on the gross margin number, 20%-25% on the EBITDA margin.
We talk about that on our call pretty much all the time, so. Last slide is here is just we have a diverse array of customers. Our customers tend to be the distributors who then sell to installers. We do work with installers to sell the value of Tigo then get them to buy from the distributors, who then they install to the consumer. Those distributors are also very well diversified. We're quite heavily diversified. We're not dependent on any particular distributor or customer. Nobody's more than a 10% customer. The names you can see here, they're not necessarily household names, but within the solar industry, they are fairly well-known names.
Finally, we've had a heavy EMEA presence for the last several years of above 60%, currently running around 70%. It may not be apparent to everybody, in terms of total installed solar, every year, cumulative solar, you've got about 50% coming from China, you've got about 25% coming from Europe, and you only have about 5% coming from the U.S. The U.S. is actually a much smaller contributor to the solar installations than in many other areas. That's why you see our bent towards Europe because there's a lot more activity, sales activity going on over there. With that, Zvi and I are happy to answer any questions.
On the target model, what percent do you think can you split up the revenue that you think you'll eventually get to? Like what percent is the batteries versus the software versus the optimizers and inverters?
The question is on the target model, what would be the breakdown of the revenues of the product mix? It, obviously you get there a little faster with just MLPE because of the higher margins on that. Currently we're tracking towards that figure this, maybe not this year, but next year. That puts us at, you know, 15%-20% non-MLPE.
Because your gross margins are 40%, you're higher than that right now, which means you assume batteries will grow faster than the rest of the. I assume software's a much higher margin as is the optimizers. That's why I was wondering how big do you think batteries will get to?
I mean, it depends. We just rolled out the new product, the line of batteries. It's 16% now. Wouldn't be surprised to see that number grow north of 20%. That may take down the gross margin from low forties. We've been 42%-44% last several quarters. You'll see a significant increase in both the top line and the gross profit dollars. I think either way, I think it would be a net win for shareholders.
Any other questions?
Yeah. Hi. I got one. For the Tigo TS4, so you've got like 10 million units of that. It's got gross margins of up to 40%. Just like where is that manufactured and, what's the approximate cost of one of those?
What's the second part?
Approximate cost.
Okay. To repeat the question, where are the Tigo TS4s being manufactured and what's approximately the cost?
Right.
Okay. As far as manufacturing, most of our manufacturing is done in Thailand and then also in a portion in China. I believe that yesterday we announced the first shipment from the U.S. manufacturing facility. We are having those three locations where we produce those products. You can pretty much suspect what the actual cost is by virtue of knowing the percentage. If you check in the market, our products are being sold at roughly about $40 in the market. You can pretty much figure out the actual cost. Okay? We don't announce the actual numbers, but it's very easy to figure it out.
Thank you.
Most welcome. Any other questions?
Your AI project model you said uses AI and ML to forecast generation. How accurate is that, and at what threshold of accuracy can you start to charge a premium for it, maybe, and just like sort of how does that work?
Are you asking about the projection for the forecasting?
Well, just like how accurate the prediction model is?
Okay. The question is, how accurate is the prediction model for forecasting energy? The accuracy we actually share with customers is 99.7%, okay? Which is very high out there. We actually are managing to match most of them. In some cases, it can vary by two, three points. It depends on various conditions. We have customers in Ukraine, you can imagine that things are not very stable, and it's hard to predict. In general, it's definitely above average 97.5%, average, okay? Just to give you an idea. You asked about also, is there an impact on revenue projection, production as a result of accuracy, right? Most of the contracts we actually have with customers are five-year contracts, they are based on the number of meters they actually have.
We are growing with our customers as time goes by, number one. Number two, we currently have only one agreement in which we are so confident that we actually agreed to participate in an upside of the accuracy. So far we are doing well, but it's early stage, and we have just one. I don't wanna call it like a phenomena. We are actually experimenting with it, okay.
How big can that software business become?
I'm sorry. How big is the I need to repeat the question.
How big it is now, but I'm wondering should it go 5x in a few years?
It can go even more than 5x. Yes. The question was how big can this software become, and right now it's about 2% of our business, and it can become much more than 5x if the question was 5x of that business, which is 10%. Yes, it can be much more than that.
Any idea about how much?
I'm not going to make any forecast projection on that growth at this stage, obviously we invested in it and continue to invest because we do believe it can become major. We didn't even scratch the surface of penetration. We have only 20-some customers so far. It's a very rich field to go after, okay? Every single customer that is in the VPP business, the Virtual Power Production, buying and selling, needs this product, there are many of them in the world, a very large number, okay? The target is fairly rich. Any other questions, guys? We are getting close to the end of the time.
Can the software be deployed over anyone's products or is it only?
Can the software be ported in any one product? I will tell you, even though most of our business is in the solar alternative energy, that prediction software currently at this stage is servicing not just solar. We have a gas turbine set of customers, a fairly sizable one, and we also have other alternative oil-based generators. Our smallest one is 400 MW station, the smallest one we have. Yes, it is servicing more than just solar.
How does Tigo differentiate itself from Enphase?
The question is how does Tigo differentiate itself from Enphase? Actually you picked the one which is the easiest to differentiate. They are in the MLPE space like we are in the MLPE space. What Enphase is attempting to do is actually take the two main functions, the MLPE function and the inverter, and put them together, and they call it a microinverter. It combines those two functions. Efficiency of generating energy, by far we have an advantage, because most of those microinverters or inverters are in the 97% range efficiency if they are very good. We're at 99.7% plus, just to give you an idea. two installations, very easy, 10 seconds in our case. You sl ide it on the panel. You don't need ground. You don't need screws, nothing.
Three, the same identical product goes to residential, commercial, and utility in our case. Enphase cannot do that. As a matter of fact, their IQ9 is slotted for the commercial market, which is different than the other products. There it's a cost-based analysis and also functionality of the technical characteristics of the solution. Last but not least is cost. Since they do combine the functionality into a single product of the inverter and the optimizer, their cost base and architecture is requiring more power components, about twice as many as Tigo does. That's the way to differentiate.
Any other questions? Thank you guys very much. All the best.