SolarEdge(US:SEDG)2025-08-07 20:32PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion for the period ended June 30, 2025 Item 1. Financial Statements This section presents SolarEdge Technologies' unaudited condensed consolidated financial statements for the three and six months ended June 30, 2025 Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $2.49 billion, total liabilities slightly increased, and stockholders' equity declined to $513.2 million due to net losses Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $1,971,913 | $2,050,565 | | Inventories, net | $529,306 | $645,897 | | Total assets | $2,490,448 | $2,646,453 | | Total current liabilities | $1,016,730 | $1,057,337 | | Total liabilities | $1,977,229 | $1,988,111 | | Total stockholders' equity | $513,219 | $658,342 | Condensed Consolidated Statements of Loss For Q2 2025, revenues increased to $289.4 million, gross profit improved to $32.1 million, and net loss narrowed to $124.7 million or ($2.13) per share Three Months Ended June 30, (in thousands, except per share data) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenues | $289,429 | $265,405 | | Gross profit (loss) | $32,131 | $(10,969) | | Operating loss | $(115,493) | $(160,182) | | Net loss | $(124,744) | $(130,818) | | Net basic and diluted loss per share | $(2.13) | $(2.31) | Six Months Ended June 30, (in thousands, except per share data) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenues | $508,909 | $469,804 | | Gross profit (loss) | $49,667 | $(37,156) | | Operating loss | $(218,219) | $(333,887) | | Net loss | $(223,267) | $(288,129) | | Net basic and diluted loss per share | $(3.83) | $(5.06) | Condensed Consolidated Statements of Cash Flows For H1 2025, operating activities generated $26.0 million in cash, a significant improvement, leading to a $162.6 million increase in cash and equivalents, ending at $572.5 million Six Months Ended June 30, (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $26,024 | $(261,791) | | Net cash provided by investing activities | $136,187 | $243,224 | | Net cash used in financing activities | $(6,610) | $(50,684) | | Increase (decrease) in cash, cash equivalents and restricted cash | $162,567 | $(78,970) | | Cash, cash equivalents and restricted cash, end of period | $572,506 | $259,498 | Notes to the Condensed Consolidated Financial Statements (unaudited) These notes detail accounting policies, segment reporting, inventory, convertible notes, restructuring activities, and pending legal proceedings, providing context to the financial statements - Following the sale of Automation Machines and discontinuation of its Energy Storage activity, the company now operates as a single operating segment focused on its intelligent inverter solutions183 - In June 2024, the company issued $300 million of 2.25% convertible senior notes due 2029 and used a portion of the proceeds to repurchase $285 million of its 0.00% notes due 202594101 - The company is undergoing restructuring plans initiated in 2024, which included reducing its workforce by approximately 900 employees in H1 2024 and an additional 400 in July 2024 to align with market conditions165 - The company is facing a consolidated securities class action lawsuit and several derivative complaints alleging violations of federal securities laws related to disclosures about inventory levels and demand in Europe145146150 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2025 financial performance, including revenue growth, narrowed net loss, operational metrics, global market conditions, and the company's strong liquidity position Overview and Global Circumstances The company has refocused on its core solar segment, facing global challenges including European demand slowdown, U.S. regulatory changes (OBBB Act), and trade tariffs - The company now operates as a single solar segment after discontinuing its LCV e-Mobility, Automation Machines, and Energy Storage divisions to focus on core activities195196 - Demand in Europe has been slow due to high inventory levels, though most distribution partners reached normalized levels by the end of Q2 2025. In contrast, U.S. demand increased in H1 2025 as inventory levels normalized200 - The One Big Beautiful Bill Act (OBBB), enacted in July 2025, amends IRA tax credits, accelerating the phase-out of certain customer credits and introducing new eligibility criteria (e.g., FEOC rules), which could negatively impact demand202204205 Key Operating Metrics Q2 2025 saw significant increases in shipments of inverters, power optimizers, and batteries, with 1,194 megawatts and 247 megawatt-hours shipped respectively Key Operating Metrics (Three Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Inverters shipped | 88,954 | 65,772 | | Power optimizers shipped | 2,742,725 | 2,001,614 | | Megawatts shipped | 1,194 | 873 | | Megawatt hours shipped - batteries | 247 | 128 | Results of Operations Q2 2025 revenues grew 9.1% to $289.4 million, gross margin improved to 11.1%, and operating expenses decreased, resulting in a narrowed net loss of $124.7 million - Q2 2025 revenue increased 9.1% YoY, driven by higher sales volumes of inverters (+31.9%), power optimizers (+31.9%), and batteries (+79.2%)222224 - Blended ASP per watt for solar products (ex-batteries) decreased 13.9% YoY in Q2 2025 due to price reductions, mainly in Europe225 - Gross margin improved to 11.1% in Q2 2025 from a gross loss of 4.1% in Q2 2024, primarily due to a $14.7 million decrease in warranty expenses and better absorption of fixed costs on higher revenue233234236 - Total operating expenses decreased to $147.6 million in Q2 2025 from $149.2 million in Q2 2024, despite a $44.8 million increase in 'Other operating expense' from an asset impairment. This was offset by significant reductions in R&D, S&M, and G&A expenses due to restructuring221237238241244 Liquidity and Capital Resources As of June 30, 2025, the company maintained strong liquidity with $545.2 million in cash and equivalents, and operating activities generated $26.0 million in H1 2025 - The company's liquidity position as of June 30, 2025, includes $545.2 million in cash and cash equivalents and $235.9 million in marketable securities258 - Net cash from operating activities for H1 2025 was a positive $26.0 million, compared to a use of $261.8 million in H1 2024, indicating improved working capital management258260 - The company has outstanding purchase obligations of $349.1 million for raw materials and manufacturing, and capital expenditure commitments of $18.5 million258 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks including foreign currency fluctuations, significant customer concentration, and unhedged commodity price volatility for raw materials - A hypothetical 10% change in the EUR/USD exchange rate would impact net income by $11.4 million for the first six months of 2025. A 10% change in the NIS/USD rate would impact net income by $19.8 million272 - Significant customer concentration exists, with one customer representing 25.3% of net trade receivables as of June 30, 2025. For Q2 2025, three customers accounted for 44.6% of total revenues276 - The company is exposed to fluctuating market prices for commodity raw materials such as Copper, Lithium, Nickel, and Cobalt, and does not currently hedge this risk277 Item 4. Controls and Procedures Management confirmed effective disclosure controls as of June 30, 2025, following the substantial implementation of a new ERP system, which changed internal controls - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025280 - The company substantially completed the implementation of a new ERP system during Q2 2025, which resulted in changes to internal controls over financial reporting281 PART II. OTHER INFORMATION This section provides other required information, including legal proceedings, updated risk factors, and exhibits Item 1. Legal Proceedings This section refers to Note 14 for details on various legal proceedings, including significant shareholder class action and derivative lawsuits - The company is party to various legal claims, with further details provided in Note 14 of the financial statements283 Item 1A. Risk Factors This section updates risk factors, emphasizing new U.S. tax law changes (OBBB Act) impacting demand and tax credits, alongside global trade environment risks and tariffs - The newly enacted OBBB amends IRA tax credits, accelerating phase-outs and imposing new eligibility criteria (e.g., domestic content, FEOC rules), which could harm demand for the company's products and reduce tax benefits285286289 - The company faces risks from U.S. tariffs on imported components and potential retaliatory tariffs from other countries on its U.S.-manufactured products, which could increase costs and harm sales293294 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the reporting period - None296 Item 3. Defaults upon Senior Securities There were no defaults upon senior securities during the reporting period - None296 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable296 Item 5. Other Information There is no other information to report for the period - None297 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including a new employment agreement, CEO and CFO certifications, and financial statements formatted in Inline XBRL - Exhibits filed include an employment agreement for Daniel Huber, CEO/CFO certifications (31.1, 31.2, 32.1, 32.2), and XBRL data298