Appendix Enphase Energy, Inc. reconciliation of GAAP nancial measures to non-GAAP nancial measuresEnphase Energy, Inc. reconciliation of GAAP nancial measures to non-GAAP nancial measures (continued) In thousands, except per share data and percentagesYear endedIn thousands, except per share data and percentages Year ended 202320222018 2023 2022 2018 Gross prot (GAAP)$ 1,058,388 $ 974,595 $ 94,445 Net income (loss) per share, basic (GAAP) $ 3.22 $ 2.94 $ (0.12) Stock-based compensation 13,357 13,097 1,071 Stock-based compensation 1.56 1.60 0.11 Acquisition related amortization 7,580 6,324 - Acquisition related expenses and amortization 0.17 0.17 0.02 Gross prot (Non-GAAP)$ 1,079,325 $ 994,016 $ 95,516 Restructuring and asset impairment charges 0.12 0.02 0.04 Reserve for non-recurring legal matter - - 0.02 Gross margin (GAAP)46.2 %41.8 %29.9 % Non-cash interest expense 0.06 0.06 0.03 Stock-based compensation0.6 %0.5 %0.3 % Non-GAAP income tax adjustment (0.63) (0.01) - Acquisition related amortization0.3 %0.3 %- % Net income per share, basic (Non-GAAP) $ 4.50 $ 4.78 $ 0.10 Gross margin (Non-GAAP)47.1 %42.6 %30.2 % Shares used in per share calculation, basic and 136,376 135,349 99,619 Operating expenses (GAAP)$ 612,647 $ 526,334 $ 92,849 diluted (GAAP and Non-GAAP) Stock-based compensation (199,500) (203,705) (10,361) Net income (loss) per share, diluted (GAAP) $ 3.08 $ 2.77 $ (0.12) Acquisition related expenses and amortization (15,317) (16,521) (1,614) Stock-based compensation 1.57 1.55 0.11 Restructuring and asset impairment charges (15,715) (2,384) (4,128) Acquisition related expenses and amortization 0.16 0.16 0.02 Reserve for non-recurring legal matter-- (1,765) Restructuring, asset impairment and other charges 0.11 0.02 0.04 Operating expenses (Non-GAAP)$ 382,115 $ 303,724 $ 74,981 Reserve for non-recurring legal matter - - 0.02 Operating expense % of revenue16.7 %13.0 %23.7 % Non-cash interest expense 0.06 0.06 0.03 Income from operations (GAAP)$ 445,741 $ 448,261 $ 1,596 Non-GAAP income tax adjustment (0.57) 0.06 - 1 $ 4.41 $ 4.62 $ 0.10 Stock-based compensation212,857216,80211,432 Net income per share, diluted (Non-GAAP) Acquisition related expenses and amortization22,89722,8451,614 Shares used in per share calculation (GAAP) 143,290 144,390 99,619 Restructuring and asset impairment charges15,7152,384 4,128 Shares used in per share calculation (Non-GAAP) 139,214 140,315 111,696 Reserve for non-recurring legal matter-- 1,765 Income from operations (Non-GAAP)$ 697,210 $ 690,292 $ 20,535 Income-based government grants (GAAP) $ 53,470 $ - $ - Net income (loss) (GAAP)$ 438,936 $ 397,362 $ (11,627) Incremental cost for manufacturing in U.S. (11,603) - - Stock-based compensation 212,857 216,802 11,432 Net IRA benet (Non-GAAP) $ 41,867 $ - $ - Acquisition related expenses and amortization 22,897 22,845 1,614 Net cash provided by operating activities (GAAP) $ 696,780 $ 744,817 $ 16,132 Restructuring and asset impairment charges 15,715 2,384 4,128 Purchases of property and equipment (110,401) (46,443) (4,151) Reserve for non-recurring legal matter - - 1,765 Free cash ow (Non-GAAP) $ 586,379 $ 698,374 $ 11,981 Non-cash interest expense 8,380 8,169 2,701 Non-GAAP income tax adjustment (85,544) (138) - Net income (Non-GAAP)$ 613,241 $ 647,424 $ 10,013 1 Calculation of non-GAAP diluted net income per share for the year ended December 31, 2023, 2022, and 2018, excludes convertible notes due 2023 expense, net of tax of approximately $0.1 million, $0.1 million, and $0.7 million, respectively, from non-GAAP net income. 42 ENPHASE CEO LETTER TO SHAREHOLDERS 2023 43