Financial Data and Key Metrics Changes - Total revenues for Q2 2025 were $289 million, with non-GAAP revenues at $281 million after excluding $8 million from discontinued operations [22] - Non-GAAP gross margin increased to 13.1% from 7.8% in Q1 2025, driven by higher revenue and increased utilization of operational cost structure [23][24] - Non-GAAP operating loss for Q2 was $48.3 million, an improvement from a loss of $72.4 million in Q1 [26] - Non-GAAP net loss was $47.7 million in Q2, compared to $66.1 million in Q1, with net loss per share improving to $0.81 from $1.14 [26] Business Line Data and Key Metrics Changes - U.S. revenues amounted to $185 million, representing 66% of non-GAAP revenues, while Europe contributed $65 million (23%) and international markets $31 million (11%) [22] - The company recorded a one-time expense of $18 million related to the disposition of its tracker business and a $37 million write-down of the Stella II facility [25] Market Data and Key Metrics Changes - The U.S. residential market is expected to see a shift towards the TPO model, which is anticipated to accelerate in 2026 [12] - In Europe, the company has seen initial market share gains in Q2, although overall share remains below historical levels [15] Company Strategy and Development Direction - The company plans to maximize opportunities from the One Big Beautiful Bill Act, which supports onshoring manufacturing to the U.S. and extends storage tax credits [6][7] - The focus is on ramping up U.S. manufacturing, with production facilities in Texas, Florida, and Utah [19] - The NexSys platform is on track for initial volume by the end of the year, aimed at enhancing product offerings and market competitiveness [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive free cash flow for the full year 2025, despite challenges from tariffs [10][27] - The company anticipates a decline in residential demand in 2026 due to the elimination of the 25D credit, but expects this to be partially offset by the TPO shift [9][74] - Management highlighted the importance of domestic content and compliance with FiOQ requirements to capture market share [12][44] Other Important Information - The company has approximately $812 million in cash and investments, with a net cash position of about $470 million [27] - Inventory levels decreased by $108 million to $529 million, marking the fifth consecutive quarter of reduction [28] Q&A Session Summary Question: Sustainability of revenue in Q2 and Q3 - Management indicated that Q3 guidance does not include significant pull forward of demand related to 25D or safe harbor, reflecting ongoing business recovery [35] Question: Gross margin expectations beyond Q3 - Management noted that higher revenue will drive better utilization of fixed costs, contributing to improved margins [38] Question: Safe harbor opportunities in C&I business - Management refrained from providing specifics on safe harbor deals but acknowledged strong demand in the C&I segment [44] Question: Revenue growth expectations in Europe and the U.S. - Management expects strong performance in the U.S. market, while the European market may remain weak [53] Question: Pricing strategy in Europe - Management stated that pricing is not currently a barrier to growth, and they are prepared to respond to market conditions as needed [97] Question: Battery sourcing strategy and margin targets - Management emphasized a focus on quality and reliability in battery sourcing, with ongoing efforts to improve cost structures [100] Question: Warranty impact on margins - Management noted improvements in product quality, which should positively affect warranty-related costs over time [105]

Company Overview and Q2 2025 Highlights SolarEdge reported Q2 2025 results, highlighting steady progress with revenue growth and margin expansion [Introduction and CEO Statement](index=1&type=section&id=Introduction%20and%20CEO%20Statement) CEO Shuki Nir highlighted SolarEdge's second consecutive quarter of revenue growth and margin expansion - SolarEdge achieved its **second consecutive quarter of year-over-year and sequential revenue growth**[3](index=3&type=chunk) - The company also experienced **margin expansion** during the quarter[3](index=3&type=chunk) [Second Quarter 2025 Financial Summary (GAAP & Non-GAAP)](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Summary%20%28GAAP%20%26%20Non-GAAP%29) SolarEdge reported sequential revenue and gross margin growth, reduced non-GAAP losses, while GAAP losses increased and cash flow turned negative [Revenue and Shipments](index=1&type=section&id=Revenue%20and%20Shipments) Q2 2025 revenues showed strong sequential increases for both GAAP and Non-GAAP, with substantial inverter and battery shipments Q2 2025 Revenue Performance (Millions) | Metric | Q2 2025 | Prior Quarter | Sequential Change | | :----- | :------ | :------------ | :---------------- | | GAAP Revenues | $289.41 | $219.51 | +32% | | Non-GAAP Revenues | $281.0 | $212.1 | +32% | - The Company shipped **1,194 MW (AC) of inverters** and **247 MWh of batteries** for PV applications in Q2 2025[5](index=5&type=chunk) [Margins and Expenses](index=1&type=section&id=Margins%20and%20Expenses) Gross margins improved sequentially in Q2 2025 for both GAAP and Non-GAAP, despite tariff impact, while GAAP operating expenses increased Q2 2025 Gross Margin and Operating Expenses | Metric | Q2 2025 | Prior Quarter | Sequential Change | | :----- | :------ | :------------ | :---------------- | | GAAP Gross Margin | 11.1% | 8.0% | +3.1 pp | | Non-GAAP Gross Margin | 13.1% | 7.8% | +5.3 pp | | GAAP Operating Expenses (Millions) | $147.61 | $120.31 | +$27.3 | | Non-GAAP Operating Expenses (Millions) | $85.2 | $89.1 | -$3.9 | - New tariffs had a **negative impact of approximately 1% on gross margin** in the second quarter[6](index=6&type=chunk) [Operating and Net Loss](index=1&type=section&id=Operating%20and%20Net%20Loss) GAAP operating and net losses increased in Q2 2025, while Non-GAAP operating and net losses significantly narrowed Q2 2025 Operating and Net Loss (Millions) | Metric | Q2 2025 | Prior Quarter | Sequential Change | | :----- | :------ | :------------ | :---------------- | | GAAP Operating Loss | $(115.51) | $(102.71) | $(12.8) | | Non-GAAP Operating Loss | $(48.3) | $(72.4) | +$24.1 | | GAAP Net Loss | $(124.71) | $(98.51) | $(26.2) | | Non-GAAP Net Loss | $(47.7) | $(66.1) | +$18.4 | | GAAP Net Loss per Share | $(2.13) | $(1.70) | $(0.43) | | Non-GAAP Net Loss per Share | $(0.81) | $(1.14) | +$0.33 | [Cash Flow and Liquidity](index=2&type=section&id=Cash%20Flow%20and%20Liquidity) Operating and free cash flow turned negative in Q2 2025, but net cash and investments portfolio increased from year-end 2024 Q2 2025 Cash Flow Summary (Millions) | Metric | Q2 2025 | Prior Quarter | Sequential Change | | :----- | :------ | :------------ | :---------------- | | Cash used in operating activities | $(7.8) | $33.8 (provided) | $(41.6) | | Free cash flow used | $(9.1) | $19.8 (generated) | $(28.9) | - As of June 30, 2025, the cash and investments portfolio, net of debt, totaled **$131.8 million**, an increase of **$18.6 million** from $113.2 million as of December 31, 2024[12](index=12&type=chunk) [Outlook for Third Quarter 2025](index=2&type=section&id=Outlook%20for%20Third%20Quarter%202025) SolarEdge projects continued revenue growth and improved non-GAAP gross margin for Q3 2025, with stable non-GAAP operating expenses Q3 2025 Financial Guidance | Metric | Guidance Range | Notes | | :----- | :------------- | :---- | | Revenues (Millions) | $315 to $355 | | | Non-GAAP Gross Margin (%) | 15 to 19 | Includes approximately 2% of new tariff impact | | Non-GAAP Operating Expenses (Millions) | $85 to $90 | | [Conference Call Information](index=2&type=section&id=Conference%20Call%20Information) SolarEdge scheduled a conference call for August 7, 2025, to discuss Q2 2025 results, with live access and webcast replay details - A conference call to discuss Q2 2025 results was scheduled for **8:00 a.m. ET on Thursday, August 7, 2025**[14](index=14&type=chunk) - Interested parties could join by dialing **+1 833-316-1983 (domestic)** or **+1 785-838-9310 (international)**, using Conference ID SEDG[14](index=14&type=chunk) - A live webcast and replay would be available in the **Investor Relations section of the Company's website**[14](index=14&type=chunk) [About SolarEdge](index=3&type=section&id=About%20SolarEdge) SolarEdge is a global leader in smart energy technology, providing intelligent inverter solutions and a broad range of smart energy offerings - SolarEdge is a **global leader in smart energy technology**, leveraging world-class engineering and innovation[17](index=17&type=chunk) - The company developed an **intelligent inverter solution for photovoltaic (PV) systems** to maximize power generation and lower energy costs[17](index=17&type=chunk) - SolarEdge addresses various energy market segments with solutions for **PV, storage, EV charging, batteries, and grid services**[17](index=17&type=chunk) [Use of Non-GAAP Financial Measures](index=3&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) SolarEdge uses non-GAAP measures to provide additional insights into operating results by excluding certain non-recurring or non-cash items - Non-GAAP measures exclude items such as **stock-based compensation, amortization and impairment of acquired intangible assets, restructuring and impairment charges, and certain litigation expenses**[18](index=18&type=chunk) - Management uses non-GAAP measures for **internal budgeting, forecasting, evaluating financial performance, and comparing operating results across periods**[19](index=19&type=chunk) - These non-GAAP measures have limitations and should be considered **in addition to, not as a substitute for, GAAP measures**, and may not be comparable to those of other companies[20](index=20&type=chunk) [Safe Harbor Statement](index=4&type=section&id=Safe%20Harbor%20Statement) The press release contains forward-looking statements subject to known and unknown risks and uncertainties, with no obligation for updates - The press release includes **forward-looking statements** regarding future results, business strategies, technology developments, and economic conditions[21](index=21&type=chunk) - These statements are subject to **known and unknown risks and uncertainties**, including demand for renewable energy, ability to forecast demand, changes in tax laws, trade environment, and macroeconomic conditions[22](index=22&type=chunk) - Readers should not place **undue reliance on forward-looking statements**, and the company does not undertake to update them[22](index=22&type=chunk) [Investor Contacts](index=4&type=section&id=Investor%20Contacts) Contact information for SolarEdge's Investor Relations department and Sapphire Investor Relations, LLC is provided for inquiries - **JB Lowe** is the Head of Investor Relations for SolarEdge Technologies, Inc[24](index=24&type=chunk) - **Erica Mannion or Michael Funari** from Sapphire Investor Relations, LLC can also be contacted[24](index=24&type=chunk) - All investor inquiries can be directed to **investors@solaredge.com**[24](index=24&type=chunk) [Condensed Consolidated Financial Statements (GAAP)](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20%28GAAP%29) This section presents SolarEdge's GAAP financial statements, including statements of loss, balance sheets, and cash flows [Condensed Consolidated Statements of Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Loss) GAAP statements show a net loss of $(124,744) thousand for Q2 2025, an increase from the prior year, despite higher revenues Condensed Consolidated Statements of Loss (GAAP, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Revenues | $289,429 | $265,405 | $508,909 | $469,804 | | Cost of revenues | 257,298 | 276,374 | 459,242 | 506,960

Core Insights - SolarEdge Technologies and Enphase Energy have lost their significant post-pandemic gains, with SolarEdge underperforming compared to the S&P 500 Index and the iShares Global Clean Energy ETF [1] Company Performance - SolarEdge Technologies is currently underperforming relative to both the S&P 500 Index and the iShares Global Clean Energy ETF, indicating a decline in market performance [1] Market Context - The decline in performance for both SolarEdge and Enphase Energy suggests a broader trend affecting clean energy stocks post-pandemic, reflecting potential shifts in investor sentiment or market conditions [1]

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system. The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Within the past ...

Group 1 - First Solar (FSLR) stock price increase narrowed to 4.5% [1] - Daqo New Energy ADR currently up 7.6%, SolarEdge up 4.2%, Clean Energy ETF QCLN up 2.4%, and Canadian Solar ADR up 1.6% [1] - U.S. solar manufacturers have filed anti-dumping and countervailing duty petitions against three Asian countries: India, Indonesia, and Laos [1]

Core Viewpoint - Morgan Stanley has adjusted ratings for several U.S. solar stocks due to market and policy changes, downgrading Enphase Energy and SolarEdge Technologies to "Neutral" while favoring Sunrun as a preferred stock [1][2]. Group 1: Enphase Energy - Morgan Stanley downgraded Enphase Energy's rating from "Overweight" to "Neutral" and reduced the target price from $64 to $37, reflecting downward pressure on stock prices and profit margins due to the industry's shift towards third-party systems [1]. - Despite the downgrade, the firm believes that Enphase remains one of the few consistently profitable solar companies with a net cash position [1]. - Analyst Mark Strouse noted that the recent "Inflation Reduction Act" may lead to a lack of positive momentum in the U.S. residential solar market, potentially impacting Enphase's market share and gross margins [1]. Group 2: SolarEdge Technologies - SolarEdge Technologies' rating was also downgraded from "Overweight" to "Neutral," with a target price set at $23, following a 34% increase in the stock's performance this month [2]. - Strouse maintains that SolarEdge holds a relatively favorable position in the U.S. residential inverter market, as the residential solar sector shifts towards third-party ownership models [2]. - New foreign entity regulatory frameworks have reduced competitive pressure in the market [2]. Group 3: Sunrun - Morgan Stanley is optimistic about Sunrun, assigning it an "Overweight" rating and raising the target price from $13 to $16, due to improved visibility in solar leasing and power purchase agreements [2]. - Sunrun is expected to meet the 48E tax credit eligibility by the end of 2027 and continue to benefit from storage incentives until the end of 2032 [2].

Company Performance - SolarEdge Technologies (SEDG) ended the recent trading session at $27.57, demonstrating a +1.77% change from the preceding day's closing price, outpacing the S&P 500's 0.28% gain [1] - Prior to today's trading, shares of SolarEdge had gained 30.05%, significantly outperforming the Oils-Energy sector's gain of 4.96% and the S&P 500's gain of 4.37% [1] Upcoming Earnings - SolarEdge is anticipated to report an EPS of -$0.81, marking a 54.75% rise compared to the same quarter of the previous year [2] - The Zacks Consensus Estimate for revenue is projecting net sales of $274.47 million, up 3.42% from the year-ago period [2] Annual Forecast - For the entire year, the Zacks Consensus Estimates forecast earnings of -$3.25 per share and revenue of $1.09 billion, indicating changes of +85.86% and +17.55%, respectively, compared to the previous year [3] Analyst Estimates - Recent changes in analyst estimates for SolarEdge Technologies are important as they signify the changing landscape of near-term business trends [4] - Positive revisions in estimates convey analysts' confidence in the business performance and profit potential [4] Zacks Rank System - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has a proven track record of outperformance, with 1 stocks returning an average of +25% annually since 1988 [6] - Within the past 30 days, the consensus EPS projection for SolarEdge has moved 0.07% higher, and the company currently holds a Zacks Rank of 2 (Buy) [6] Industry Overview - The Solar industry is part of the Oils-Energy sector and currently carries a Zacks Industry Rank of 51, placing it within the top 21% of over 250 industries [7] - The Zacks Industry Rank assesses the strength of industry groups by calculating the average Zacks Rank of the individual stocks within those groups [7]

Group 1 - U.S. stock futures showed mixed results, with Dow futures decreasing by approximately 0.1% [1] - Helius Medical Technologies, Inc. (HSDT) experienced a significant pre-market decline, with shares dropping 10.9% to $8.42 following a $25 million share offering prospectus filing [1] - Blue Gold Limited (BGL) shares fell 15.6% to $63.00 in pre-market trading after a 30% drop on Monday [3] Group 2 - Pelthos Therapeutics Inc. (PTHS) shares decreased by 8.3% to $23.79 after a substantial gain of 60% on Monday [3] - AirJoule Technologies Corp (AIRJ) shares fell 5.8% to $4.82 in pre-market trading [3] - Aebi Schmidt Holding (AEBI) shares dipped 5.2% to $11.50 after a decline of over 10% on Monday [3] Group 3 - SolarEdge Technologies, Inc. (SEDG) shares declined 5.1% to $25.08 after a 4% drop on Monday, despite an upgrade from Keybanc analyst Sophie Karp from Underweight to Sector Weight [3] - Sunrun Inc. (RUN) shares slipped 4.8% to $10.58 after gaining more than 5% on Monday, also receiving an upgrade from Keybanc analyst Sophie Karp from Underweight to Sector Weight [3] - Shoals Technologies Group Inc (SHLS) shares fell 4% to $6.05 after a 5% gain on Monday [3]

Core Viewpoint - The Republican Party has canceled the consumption tax on wind and solar projects at the last moment, leading to a significant rise in U.S. solar stocks. However, concerns remain regarding the potential increase in costs for renewable energy developers due to reliance on foreign components and supply chains dominated by China [1][2]. Group 1: Tax Legislation Impact - The latest tax and spending bill passed by the U.S. Senate includes a gradual phase-out of tax credits for solar and wind energy starting in 2026, with complete elimination by 2028. Projects must be operational by the end of 2027 to qualify for tax credits [2]. - The bill allows nuclear tax credits to continue until 2036, while hydrogen tax credits will be eliminated by 2028 [2]. Group 2: Industry Reactions - The President of the Solar Energy Industries Association expressed concerns that the bill undermines the recovery of U.S. manufacturing and the country's global energy leadership, predicting higher electricity costs for households and potential job losses [2]. - Some U.S. manufacturers support the proposed tax changes, emphasizing the need to reduce dependence on China's clean energy supply chain [1]. Group 3: Legislative Challenges - The bill, known as the "Big and Beautiful Act," passed the Senate with a narrow margin of 51 to 50 but faces significant challenges in the House of Representatives due to concerns from some Republican lawmakers about its impact on the federal deficit [2]. - The Congressional Budget Office estimates that the bill could increase the federal deficit by at least $3 trillion over the next decade [2].

Group 1 - The U.S. Senate passed President Trump's latest tax and spending bill, which removed consumption taxes on wind and solar projects, leading to a significant rise in solar stocks [1] - Solar stocks such as Shoals Technologies (SHLS.US) increased nearly 24%, Array Technologies (ARRY.US) rose nearly 13%, and Sunrun (RUN.US) gained nearly 11% following the news [1] - The bill mandates a gradual phase-out of solar and wind tax credits starting in 2026, with a complete elimination by 2028, while nuclear tax credits will last until 2036 [1] Group 2 - The American Solar Industry Association expressed concerns that the bill undermines U.S. manufacturing recovery and energy leadership, potentially leading to higher electricity costs and job losses [2] - The bill passed the Senate with a narrow margin of 51 to 50 but faces challenges in the House due to concerns over its impact on the federal deficit, estimated to increase by at least $3 trillion over the next decade [2]