SolarEdge Technologies : Q1 2025 Prepared Remarks

Published: 2025-05-06 10:59:11 ET SEDG

Published on 05/06/2025 at 10:59

Good morning. Thank you for joining us to discuss SolarEdge's operating results for the first quarter ended March 31, 2025, as well as the company's outlook for the second quarter of 2025. With me today are Shuki Nir, Chief Executive Officer, and Asaf Alperovitz, Chief Financial Officer.

Shuki will begin with a brief review of the results for the first quarter ended March 31, 2025. Asaf will review the financial results for the first quarter, followed by the Company's outlook for the second quarter of 2025. We will then open the call for questions.

Please note that this call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statements contained in our earnings press release, the slide presentation posted on our website ahead of this call today and our filings with the SEC for a more complete description of such risks and uncertainties. Please note, during this earnings call we may refer to certain Non-GAAP measures, including Non-GAAP net income and Non-GAAP net diluted earnings per share, which are not measures prepared in accordance with US GAAP. The Non-GAAP measures are being presented because we believe that they provide investors with a means of evaluating and understanding how the Company's management evaluates the Company's operating performance. Reconciliation of these measures can be found in our earnings press release, slide presentation, and SEC filings. These Non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with US GAAP.

Listeners who do not have a copy of the quarter ended March 31, 2025 press release or the supplemental material, may obtain a copy by visiting the "Investor Relations" section of the Company's web site.

With that, I will turn the call over to Shuki.

Thank you JB. Good morning everyone and thank you for joining us

today.

Before we dive in, I want to welcome Asaf Alperovitz to the SolarEdge team. Asaf brings deep financial and operational experience, and I'm confident he'll be an important part of executing our turnaround and reaching our full potential.

Now to business. I will start with our progress on the four strategic priorities we set for the year. Then I'll walk through our approach to mitigating the impact of the recently imposed tariffs. And finally, I'll share my perspective on the state of the business across our key geographies.

Let's begin with our priorities. Last quarter I outlined the four key priorities that are going to drive the SolarEdge turnaround story and position us for sustained long term growth. First, strengthening our financials. Second, regaining market share. Third, accelerating innovation. And fourth, ramping up our U.S. manufacturing. I believe that our first quarter results and our second quarter outlook demonstrate meaningful progress across all four priorities.

First on financial strength. In Q1, we delivered quarter-over-quarter and year-over-year revenue growth. We expanded our gross margins. We reduced our operating expenses. And we delivered our second straight quarter of positive free cash flow. All that, in the face of a more challenging global environment.

We are not done focusing on operational efficiency. Last month, we sold one of our battery manufacturing facilities in Korea to Enovix. And last week, we divested our tracker business, which will reduce our operating expenses without a significant impact to our top line.

Our second priority is recapturing market share. This effort spans geographies, product lines, market segments and customer types. Starting with the U.S. In 2024, Wood MacKenzie recognized SolarEdge as the number one inverter supplier in the U.S. for rooftop solar installations. We believe this is a result of our focus on customers, our leading technology, our strong service and support capabilities, and our enhanced product quality and reliability.

In U.S. resi, we have seen a continued shift to the TPO model, where our domestically-made inverters and optimizers help to qualify for the 10% domestic content adder. We are also seeing higher demand for our residential batteries, in part due to the change in section 48E as well as our growing participation in VPP programs. Over 35% of our battery attached sites participate in 1 of 28 different VPP programs, through our TPO partners or directly.

A similar shift towards domestic content in the C&I space provides us with a distinct competitive advantage and an ability to take share in this growing segment.

Enterprise accounts are a large and growing part of the C&I segment. We believe that we are the perfect partner for these customers because they have complex requirements, they demand efficient, cost-effective energy generation, they want leading-edge energy management capabilities and they hold their vendors to the highest standards of service, safety, quality and reliability.

We see a healthy and growing pipeline of opportunities in the enterprise space, and have already signed several agreements. For example, last month, we entered into a multi-year strategic partnership with a global leader in logistics real estate. Under our partnership, this leading logistics real estate enterprise is planning to integrate SolarEdge's products across its global portfolio.

Turning to Europe. We are cautiously optimistic that we have turned the corner in our market share position. Our strong POS in the quarter and feedback from our channel partners indicate promising results from our pricing and promotion campaign.

Two markets that have seen particular strength are Germany, where our sell-through was up quarter-over-quarter, and the Netherlands where our sell through was up for the second quarter in a row. In the Netherlands, we see some positive momentum from our upgrade campaign that replaces a PV-only inverter with a new backup inverter plus two batteries. Given our large installed base in the country, we expect this battery upgrade campaign to be a source of growth as the Netherlands gets closer to eliminating net metering.

Turning to our third priority - accelerating innovation. Intersolar starts tomorrow in Munich, and if you are in town please stop by our booth and one of our associates would be happy to take you through our latest offerings.

Starting with the new Nexis platform, which remains on track for initial volumes in the fourth quarter of 2025. At Intersolar, we will be displaying live production data from our three phase inverter Alpha sites, and our new single phase and scalable storage solutions will also be on display.

We have also announced that our SolarEdge ONE Controller for Residential is compliant with Germany's regulation 14a, which applies to most new installations of batteries, EV chargers and heat pumps. This opens up a

significant opportunity for us in the German residential market by providing our customers with a simple solution to comply with a complex regulation.

On the C&I side, we are launching our new EV charging hardware and software solution, which significantly reduces EV charging costs for businesses. This solution is integrated into the ONE for C&I energy optimization software platform, which is now available to all SolarEdge customers.

At the core of these solutions is our team's drive for meaningful innovation, that adds value to our customers and differentiates us from our competition. It therefore makes us proud to be recognized by VDE Renewables, a leading provider of quality assurance services for the global renewable energy sector. Their recent report covers several areas where our technology has a distinct advantage in efficiency and safety. VDE reported that our advanced safety solutions effectively prevent fire hazards and exceed international PV safety regulations. On cybersecurity, the VDE report highlighted that SolarEdge provides an example of how robust cybersecurity mechanisms are essential to mitigating risks associated with cyber threats. They also note that our approach aligns with international best practices and validates the growing need for cybersecurity within the solar industry. We believe that such recognition does not go unnoticed by our customers.

Our fourth key priority is ramping up our US manufacturing. In Q1 we executed our plans to ramp up manufacturing of US-made products. We have created nearly 2,000 jobs in the U.S., helping us reach a capacity of 70,000 inverters per quarter, including the shipment of our first domestic content C&I products.

As you can see, we've made a lot of progress in a short time.

Disclaimer

SolarEdge Technologies Inc. published this content on May 06, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 06, 2025 at 14:38 UTC.